Page:United States Statutes at Large Volume 68A.djvu/434

 394

INTERNAL REVENUE CODE OF 1954

in favor of others), with no power in any other person to appoint such amounts to any person other than the surviving spouse— .: (A) such amounts shall, for purposes of subsection (a), be considered as passing to the surviving spouse, and (B) no part of such amounts shall, for purposes of paragraph (1)(A), be considered as passing to any person other than the surviving spouse. This paragraph shall apply only if, under the terms of the contract, such power in the surviving spouse to appoint such amounts, whether exercisable by will or during life, is exercisable by such spouse alone and in all events, (c) LIMITATION ON AGGKEGATE OF DEDUCTIONS.— (1) GENERAL RULE.—The aggregate amount of the deductions

allowed under this section (computed without regard to this subsection) shall not exceed 50 percent of the value of the adjusted gross estate, as defined in paragraph (2). (2) COMPUTATION OF ADJUSTED GROSS ESTATE.— (A) GENERAL RULE.—Except as provided in subparagraph (B)

of this paragraph, the adjusted gross estate shall, for purposes of subsection (c)(1), be computed by subtracting from the entire value of the gross estate the aggregate amount of the deductions allowed by sections 2053 and 2054. (B)

SPECIAL

RULE

IN CASES INVOLVING

COMMUNITY

PROP-

ERTY.—If the decedent and his surviving spouse at any time, held property as community property under the law of any State, Territory, or possession of the United States, or of any foreign country, then the adjusted gross estate shall, for purposes of subsection (c)(1), be determined by subtracting from the entire value of the gross estate the sum of— (i) the value of property which is at the time of the death of the decedent held as such community property; and (ii) the value of property transferred by the decedent during his life, if at the time of such transfer the property was held as such community property; and (iii) the amount receivable as insurance under policies on the life of the decedent, to the extent purchased with premiums or other consideration paid out of property held as such community property; and (iv) an amount which bears the same ratio to the aggregate of the deductions allowed under sections 2053 and 2054 which the value of the property included in the gross estate, diminished by the amount subtracted under clauses (i), (ii), and (iii) of this subparagraph, bears to the entire value of the gross estate. For purposes of clauses (i), (ii), and (iii), community property (except property which is considered as community property solely by reason of the provisions of subparagraph (C) of this paragraph) shall be considered as not "held as such community property" as of any moment of time, if, in case of the death of the decedent at such moment, such property (and not merely one-half thereof) would be or would have been includible in determining the value of his gross estate without regard to the provisions of section 402(b) of the Revenue Act of 1942. § 2056(b)(6)


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