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established for this purpose; or for furnishing the services
of trained nurses to persons unable to pay for them; or for
aiding the general body of litigants by improving the effi-
cient administration of justice. . . . An association whose
sole purpose is the instruction of the public, even if it merely
disseminates propaganda on a single question. Thus an
association inculcating prohibition or protectionist principles
is exempt. . . . Societies designed to encourage the per-
formance of first-class orchestral music are not exempt, the
purpose being merely to provide a high grade of entertain-

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§ 346. Property Previously Taxed

The federal regulations also allow a deduction of an amount equal to the value at the time of the present decedent's death, of any property which can be identified as having been received by him as a share from the estate of any person who died within five years prior to the present decedent's death, if an estate tax under the Revenue Act of 1917 or the Revenue Act of 1918 was actually collected from such estate, and also an amount equal to the value of the property which can be identified as having been acquired by the decedent in exchange for property received as a share in the estate of such a prior decedent. The property received from the prior estate must have been returned as part of the gross estate of the prior decedent, and the property the value of which is sought to be deducted, or property taken in exchange therefor, must have been included in the gross estate of the second decedent.

Under the proposed revenue act before Congress as this work goes to press, the value subject to tax at the time of the prior transfer is the measure of the deduction allowed.

§ 347. Specific Exemptions

The first $50,000 of the estate of every resident decedent is exempt. Consequently, estates of residents appraised a

13 Article 54 of Regulations 37.

less than that amount are entirely exempt. Any part of the estate of a non-resident decedent, however, situated in the United States, is taxable without regard to the amount.

For exemptions for those dying while actually serving in the army or navy or from injuries received or diseases contracted while in the service, see § 328.

§ 348. Deductions Allowed Non-Resident Decedents

The rules in the various states differ, but as the federal law is applicable in all it can be more fully commented on here.

Whereas the net estate in the case of a resident is determined by making the specified deductions from the entire gross estate, the net estate in the case of a non-resident is determined by making the deductions from the value of so much of the gross estate as is situated in the United States."

There may be deducted only that portion of funeral and administration expenses, claims against the estate, losses from casualty or theft, and an allowance for the support of the decedent's dependents, which the part of the estate in the United States bears to the whole estate, and in no case may the amount so deducted exceed one-tenth of the value of the gross estate in the United States. It is immaterial whether the expenses and claims are paid and incurred in this country or elsewhere.

The specific exemption of $50,000 allowed to residents (see § 347) does not apply to estates of non-residents, nor is there any exempt amount allowable in its place.

Property the transfer of which was previously taxed is exempt if in the United States at the time of the death of the second decedent.

Bequests of a public or semipublic nature made by a nonresident are exempt if they conform to the requirements for

14 Article 59 of Regulations 37.

such legacies from the estates of residents, with the following limitations:

Where the bequest is to a corporation, it is limited to a domestic corporation; that is, one created or organized in the United States. Where the bequest is to a trustee, it must be for use exclusively within the United States. The requirements are different and should not be confused. The first relates to the character of the donee; the second to the character of the use of the gift."

REVIEW QUESTIONS

I. How is the amount of the net estate determined? What deductions are made? What weight has the decision of a state court as to the amount of deductions?

2. What is the rule as to funeral expenses? Do the state and the federal practices on this subject coincide?

3. Generally, what is allowed under the head of administration expenses? Do the state and the federal practices coincide? When an executor acts as trustee, may his fees as trustee be deducted?

4. What claims may be deducted? When are taxes deductible? Are personal taxes to be deducted? Taxes on realty? Taxes on income? State inheritance taxes?

5. What is the rule as to claims secured by mortgage? What is the rule as to interest?

6. What is the rule as to deducting the executor's commission? May such commission be deducted before it is paid? If a legacy were left to the executor in lieu of his commission, can it be deducted?

7. What is the rule concerning casualties and theft? When must such loss occur to be deductible?

8. What deduction for dependents is allowed by the federal law? 9. What is the rule as to bequests for public or charitable purposes? What are charitable purposes in this sense?

10. What is meant by "property previously taxed"?

Article 63 of Regulations 37.

11. What is the specific exemption for residents? Does this apply to

non-residents?

12. How is the net estate of a non-resident determined?

13. What limit is placed on the amount of deductions from the estate

of a non-resident?

CHAPTER XXXIX

PROCEDURE UNDER FEDERAL LAW

§ 349. Filing Papers for Federal Tax

The following general rules apply to all papers required to

be filed in connection with federal estate tax matters:

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In the case of resident decedents the filing must be done at the office of the collector in whose district the decedent had his domicile at the time of his death; in the case of non-resident decedents, with the Commissioner of Internal Revenue, Washington, D. C.

No papers are required to be filed in the case of a resident's estate of less than $50,000.

All papers must be filed in duplicate.

The executor or the administrator is responsible for the filing of all papers, but under certain circumstances others must file. (See next section.)

§ 350. The 60-Day Notice

The first document required to be filed for the federal tax is known as the "60-day notice."

The executor or the administrator of an estate is required to file notice on Form 704 secured from an office of the Bureau of Internal Revenue for that purpose,

.. within 60 days of his appointment by the court, or of coming into possession of any property of the estate, whichever event occurs first. The primary purpose of the notice is to advise the Government of the existence of taxable estates, and filing should not be delayed beyond the 60-day period because of uncertainty as to the exact value of the

assets. . . .

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