26 U.S.C. § 2053 — Expenses, indebtedness, and taxes

(a) For the tax under section 2001, determine the taxable estate by subtracting from the gross estate amounts allowed by the law governing the estate, whether that law is inside or outside the United States, for: (1) funeral expenses; (2) administration expenses; (3) claims against the estate; and (4) unpaid mortgages or other debts on property whose full value is included in the gross estate.

(b) Subject to subsection (c)(1), administration expenses for property included in the gross estate but not subject to claims may be deducted to the same extent they could be deducted under subsection (a) if the property were subject to claims. The expenses must be paid before the assessment period in section 6501 expires.

(c)(1)(A) A deduction for a claim, unpaid mortgage, or debt based on a promise or agreement is limited to the amount genuinely contracted for adequate and full consideration in money or money’s worth. If the promise was the decedent’s promise to contribute or give to a section 2055 recipient for the purposes listed there, the deduction is instead limited to what section 2055 would allow if the promise were a bequest. (B) No deduction is allowed for income taxes on income received after death, property taxes not accrued before death, or estate, succession, legacy, or inheritance taxes. (C) No deduction is allowed for a remainderman’s claim relating to section 2044 property. (D) No deduction is allowed for interest under section 6601 on unpaid section 2001 tax during a section 6166 payment extension. (2) For amounts in subsection (a), disallow the part by which the specified deductions exceed the value at death of “property subject to claims,” except for amounts paid before the estate-tax-return filing date. “Property subject to claims” means property included in the gross estate, or its proceeds, that under applicable law bears these deductions in the estate’s final settlement. Reduce that property’s value by the section 2054 deduction attributable to it.

(d)(1) Despite subsection (c)(1)(B), the taxable estate may deduct a foreign estate^*, succession, legacy, or inheritance tax if the executor elects before the section 6501 assessment period expires. The tax must be imposed by and actually paid to a foreign country on property located there, included in a United States citizen’s or resident’s gross estate, and transferred by the decedent for public, charitable, or religious uses described in section 2055. Regulations determine the amount and the country where property is located, using subchapter B rules. The election must follow regulations. (2) The deduction is allowed only if the resulting reduction in section 2001 tax benefits only the public, charitable, or religious transferees described in section 2055 or section 2106(a)(2). If the tax is equitably divided among all transferees, ignore any Federal estate-tax reduction that other transferees must pay when measuring that benefit. (3)(A) The election waives a credit under a death-tax treaty for the tax or part deducted here. (B) Section 2014(f) describes the effect on the foreign-death-tax credit.

(e) Section 2043(b)(2) addresses when giving up certain marital rights counts as consideration in money or money’s worth..