REVENUE RULE 93-48

1993-2 C.B. 270, 1993-25 I.R.B. 9.

Internal Revenue Service
Revenue Ruling

VALUE OF TRANSFERS

Published: July 19, 1993

§ 2055. Transfers for Public, Charitable, and Religious Uses, 26 CFR 20.2055-1: Deduction for transfers for public, charitable and religious uses; in general.

(See Also Sections 2013, 2056; 20.2013-4, 20.2056(b)-4.)

Value of transfers. The Service has adopted the result of recent court decisions, which hold that post-death interest accruing on deferred federal estate tax payable from a testamentary transfer does not ordinarily reduce the date-of-death value of the transfer. Rev.Rul. 82-6 revoked; Rev.Ruls. 66-233 and 73-98 modified; Rev.Rul. 80-159 clarified.

The Internal Revenue Service has reconsidered Rev.Rul. 82-6, 1982-1 C.B. 137, in view of recent court decisions in Estate of Richardson v. Commissioner, 89 T.C. 1193 (1987), Estate of Street v. Commissioner, 974 F.2d 723 (6th Cir.1992), and Estate of Whittle v. Commissioner, F.2d (7th Cir.1993).

Rev.Rul. 82-6 holds that, if deferred federal estate taxes and post-death interest thereon are payable out of a residuary estate, the value of a residuary charitable bequest for purposes of § 2055 of the Internal Revenue Code must be reduced by an estimate of the maximum amount of the interest that is expected to be paid out of the residuary estate. In light of the cases cited above, Rev.Rul. 82-6 is revoked.

Rev.Rul. 66-233, 1966-2 C.B. 428, holds that, for purposes of § 2013 of the Code, the value of a residuary bequest transferred by a prior decedent is to be reduced by the amount of all administrative expenses payable from the residuary bequest. Rev.Rul. 66-233 is modified to apply to administration expenses other than interest accruing on obligations payable from the residuary bequest.

Rev.Rul. 73-98, 1973-1 C.B. 407, holds that, for purposes of § 2055 of the Code, the value of a residuary charitable bequest is reduced by the amount of administrative expenses payable from the income of the residuary property. Rev.Rul. 73-98 is modified to apply to administrative expenses other than interest accruing on obligations payable from the residuary principal or income.

Rev.Rul. 80-159, 1980-1 C.B. 206, holds that, for purposes of § 2056 of the Code, the value of a residuary marital bequest is not reduced by any interest paid on deferred federal estate taxes where state law requires both estate tax and interest on the tax to be paid from portions of the estate other than the residuary marital bequest. Rev.Rul. 80-159 is clarified to hold that the value of the marital bequest for purposes of § 2056(b)(4) is not reduced by post-death interest expense accruing on taxes even if state law requires payment from the marital bequest of estate tax and interest on the tax.

EFFECT ON OTHER DOCUMENTS

Rev.Rul. 82-6 is revoked. Rev.Rul. 66-233 and Rev.Rul. 73-98 are modified. Rev.Rul. 80-159 is clarified.

DRAFTING INFORMATION

The principal author of this revenue ruling is Esther Woodworth of the Office of the Assistant Chief Counsel (Passthroughs and Special Industries). For further information regarding this revenue ruling, contact Esther Woodworth on (202) 622-3090 (not a toll-free call).

Rev. Rul. 93-48, 1993-2 C.B. 270, 1993-25 I.R.B. 9.