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In effect, section 2055(c) provides that the
charitable deduction under section 2055(a) is based upon
the amount actually available for charitable uses; that
is, the amount of the funds remaining after the payment
of all death taxes. See sec. 20.2055-3(a)(1), Estate Tax
Regs. If section 2055(c) applies, an interrelated
calculation is required to determine the amount of the
allowable charitable deduction. See sec. 20.2055-3(a)(2),
Estate Tax Regs.
Generally, the manner in which death taxes are
apportioned to the assets that compose a decedent's gross
estate is governed by State law. See Riggs v. Del Drago,
317 U.S. 95, 97-98 (1942); Estate of Leach v. Commissioner,
82 T.C. 952, 963 (1984), affd. without published opinion
782 F.2d 179 (11th Cir. 1986); Estate of Fagan v.
Commissioner, T.C. Memo. 1999-46; Estate of McKay v.
Commissioner, T.C. Memo. 1994-362. In this case, the
decedent was a resident of North Carolina at the time of
his death, and we look to North Carolina law to determine
the manner in which death taxes are apportioned to the
decedent's estate and, specifically, to determine whether
death taxes are apportioned to the charitable bequest made
by the decedent. Estate of Fagan v. Commissioner, supra.
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