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Revenue Ruling

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 Rev. Rul. 72-6

1972-1 C.B. 306

IRS Headnote

Foreign death taxes paid to the Province of Ontario by estates of decedents dying after November 13, 1966, are allowable as a credit under section 2014 of the Code in the absence of a Presidential proclamation to the contrary; Revenue Ruling 55-381 modified.

Full Text

Rev. Rul. 72-6

Advice has been requested whether the credit provided by section 2014(a) of the Internal Revenue Code of 1954 is allowable against the decedent's Federal estate tax in the circumstances described below.

The decedent, a citizen of Canada, was domiciled in the United States at his death in 1968. A succession duty with respect to property situated in Ontario and included in his gross estate was levied by the Province of Ontario and paid by the estate.

Ontario does not allow a foreign death tax credit against its succession duty to estates of United States citizens who resided in Ontario at death.

Section 2014(a) of the Code (as amended by the Foreign Investors Tax Act, Public Law 89-809, C.B. 1966-2, 656, effective with respect to estates of decedents dying after November 13, 1966) provides that a credit is allowable against the Federal estate tax in the amount of any estate, inheritance, legacy, or succession taxes paid to a foreign country with respect to property situated within such foreign country and included in the gross estate for Federal estate tax purposes. However, section 2014(h) of the Code provides that if the President finds that (1) a foreign country does not allow United States citizens a reciprocal credit, (2) such country, when requested to do so, has not acted to provide such credit, and (3) it is in the public interest to allow the credit only if a reciprocal credit is provided by such country, then the President shall proclaim that the credit is allowable to estates of citizens of a particular foreign country only if that foreign country allows a similar credit to United States citizens residing in that country at death.

Section 20.2014-1(a)(1) of the Estate Tax Regulations provides that the credit is allowable for death taxes paid to possessions or political subdivisions of foreign states as well as the foreign countries that are states in the international sense.

Section 2014 of the Code now permits estates of resident aliens to take a credit for foreign death taxes paid, even though the foreign country of which the decedent was a citizen does not provide reciprocity for estates of United States citizens residing there. Accordingly, in the absence of a Presidential proclamation to the contrary, the credit provided by section 2014 of the Code is allowable for the taxes paid to the Province of Ontario by the decendent's estate.

Revenue Ruling 55-381, C.B. 1955-1, 464, which holds that the credit against the Federal estate tax is not allowable for death taxes paid to the Province of Ontario, is hereby modified to limit its applicability to estates of decedents dying before November 14, 1966.