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Section 2001 imposes a tax on the transfer of the taxable
estate of all citizen and resident decedents. Section 2051
defines taxable estate as the gross estate less deductions.
Section 2056(a) provides:
(a) Allowance of Marital Deduction.--For purposes
of the tax imposed by section 2001, the value of the
taxable estate shall, except as limited by subsection
(b), be determined by deducting from the value of the
gross estate an amount equal to the value of any
interest in property which passes or has passed from
the decedent to his surviving spouse, but only to the
extent that such interest is included in determining
the value of the gross estate.
Section 2056(b)(4) provides:
In determining for purposes of subsection (a) the value
of any interest in property passing to the surviving
spouse for which a deduction is allowed by this
section--
(A) there shall be taken into account the
effect which the tax imposed by section 2001, or
any estate, succession, legacy, or inheritance
tax, has on the net value to the surviving spouse
of such interest; and
(B) where such interest or property is
encumbered in any manner, or where the surviving
spouse incurs any obligation imposed by the
decedent with respect to the passing of such
interest, such encumbrance or obligation shall be
taken into account in the same manner as if the
amount of a gift to such spouse of such interest
were being determined.
Initially, we note that the arguments of both parties focus
on the law of Wisconsin where decedent was domiciled at the time
of his death. This position is consistent with the established
rule that determination of whether an expenditure is chargeable
to principal or income under State law provides the foundation
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Last modified: May 25, 2011