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Federal Register / Vol. 87, No. 123 / Tuesday, June 28, 2022 / Proposed Rules
(D) Recordkeeping. The applicant
must maintain for a period of 10 years,
the records of all reports of failures in
implementation of an ACNU and
associated adverse events known to the
applicant, including raw data and any
correspondence relating to a report of a
failure in implementation of an ACNU.
*
*
*
*
*
■ 7. Amend § 314.125 by adding
paragraph (b)(20) to read as follows:
§ 314.125

Refusal to approve an NDA.

*

*
*
*
*
(b) * * *
(20) For an NDA for a nonprescription
drug product with an additional
condition for nonprescription use under
§ 314.56, if FDA has determined the
application failed to meet the
requirements in § 314.56 applicable to
NDAs.
*
*
*
*
*
■ 8. Amend § 314.127 by adding
paragraph (a)(15) to read as follows:
§ 314.127

Refusal to approve an ANDA.

(a) * * *
(15) For an ANDA for a
nonprescription drug product with an
additional condition for nonprescription
use under § 314.56, if FDA has
determined the application failed to
meet the requirements in § 314.56
applicable to ANDAs.
*
*
*
*
*
Dated: June 15, 2022.
Robert M. Califf,
Commissioner of Food and Drugs.
[FR Doc. 2022–13309 Filed 6–27–22; 8:45 am]
BILLING CODE 4164–01–P

DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 20
[REG–130975–08]

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RIN 1545–BI11

Guidance Under Section 2053
Regarding Deduction for Interest
Expense and Amounts Paid Under a
Personal Guarantee, Certain
Substantiation Requirements, and
Applicability of Present Value
Concepts
Internal Revenue Service (IRS),
Treasury.
ACTION: Notice of proposed rulemaking
and notice of public hearing.
AGENCY:

This document proposes to
amend existing regulations issued under
section 2053 of the Internal Revenue

SUMMARY:

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Code (Code). The proposed regulations
provide guidance on the proper use of
present-value principles in determining
the amount deductible by an estate for
funeral expenses, administration
expenses, and certain claims against the
estate. In addition, the proposed
regulations provide guidance on the
deductibility of interest expense
accruing on tax and penalties owed by
an estate, and interest expense accruing
on certain loan obligations incurred by
an estate. The proposed regulations also
amend and clarify the requirements for
substantiating the value of a claim
against an estate that is deductible in
certain cases. Finally, the proposed
regulations provide guidance on the
deductibility of amounts paid under a
decedent’s personal guarantee. The
proposed regulations will affect estates
of decedents seeking to deduct funeral
expenses, administration expenses, and/
or certain claims against the estate
under section 2053. This document also
provides a notice of a public hearing on
these proposed regulations.
DATES: Electronic or written comments
must be received by September 26,
2022. The public hearing is being held
by teleconference on October 12, 2022,
at 10 a.m. EST. Requests to speak and
outlines of topics to be discussed at the
public hearing must be received by
September 26, 2022. If no outlines are
received by September 26, 2022, the
public hearing will be cancelled.
Requests to attend the public hearing
must be received by 5:00 p.m. EST on
October 7, 2022. The telephonic hearing
will be made accessible to people with
disabilities. Requests for special
assistance during the telephonic hearing
must be received by October 6, 2022.
ADDRESSES: Commenters are strongly
encouraged to submit public comments
electronically. Submit electronic
submissions via the Federal
eRulemaking Portal at
www.regulations.gov (indicate IRS and
REG–130975–08). Once submitted to the
Federal eRulemaking Portal, comments
cannot be edited or withdrawn. The IRS
expects to have limited personnel
available to process comments that are
submitted on paper through the mail.
The IRS will publish any comments
submitted electronically, and to the
extent practicable, comments submitted
on paper to the public docket. Send
paper submissions to CC:PA:LPD:PR
(REG–130975–08), Room 5205, Internal
Revenue Service, P.O. Box 7604, Ben
Franklin Station, Washington, DC
20044.
For those requesting to speak during
the hearing, send an outline of topic
submissions electronically via the

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Federal eRulemaking Portal at
www.regulations.gov (indicate IRS and
REG–130975–08).
Individuals who want to testify (by
telephone) at the public hearing must
send an email to [email protected]
to receive the telephone number and
access code for the hearing. The subject
line of the email must contain the
regulation number REG–130975–08 and
the word TESTIFY. For example, the
subject line may say: Request to
TESTIFY at Hearing for REG–130975–
08. The email should include a copy of
the speaker’s public comments and
outline of topics. Individuals who want
to attend (by telephone) the public
hearing must also send an email to
[email protected] to receive the
telephone number and access code for
the hearing. The subject line of the
email must contain the regulation
number REG–130975–08 and the word
ATTEND. For example, the subject line
may say: Request to ATTEND Hearing
for REG–130975–08. To request special
assistance during the telephonic
hearing, contact the Publications and
Regulations Branch of the Office of
Associate Chief Counsel (Procedure and
Administration) by sending an email to
[email protected] (preferred) or by
telephone at (202) 317–5177 (not a tollfree number).
FOR FURTHER INFORMATION CONTACT:
Concerning the proposed regulations,
Karlene Lesho or Melissa Liquerman at
(202) 317–6859; concerning the
submission of comments, the hearing, or
to be placed on the building access list
to attend the hearing, Regina Johnson at
(202) 317–6901 (not toll-free numbers)
or by sending an email to
[email protected].
SUPPLEMENTARY INFORMATION:
Background and Explanation of
Provisions
I. Overview
This document contains proposed
amendments to the Estate Tax
Regulations (26 CFR part 20) under
section 2053.
Section 2001(a) imposes a tax on the
transfer of the taxable estate of every
decedent who was at death a citizen or
resident of the United States. Section
2051 defines the taxable estate as the
value of the gross estate less the
deductions provided for in sections
2053 through 2058. Section 2031(a)
describes the value of the gross estate of
the decedent as including the value at
the time of the decedent’s death of all
property, real or personal, tangible or
intangible, wherever situated.
Under section 2053(a), for Federal
estate tax purposes, the value of the

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taxable estate is determined by
deducting from the value of the gross
estate the following amounts that are
allowable by the laws of the
jurisdiction, whether within or without
the United States, under which the
estate is being administered: (1) funeral
expenses, (2) administration expenses,
(3) claims against the estate, and (4)
unpaid mortgages on, or any
indebtedness in respect of, property
where the value of the decedent’s
interest therein, undiminished by such
mortgage or indebtedness, is included in
the value of the gross estate.
Final regulations amending the
regulations under section 2053 (TD
9468) were published in the Federal
Register (74 FR 53652) on October 20,
2009 (2009 Final Regulations). The 2009
Final Regulations generally limit the
deduction for claims and expenses to
the amount actually paid in settlement
or satisfaction of that item, with
exceptions for certain ascertainable
amounts, claims against the estate, and
indebtedness. See § 20.2053–1(d)(1) and
(4); § 20.2053–4(b) and (c); and
§ 20.2053–7. The 2009 Final Regulations
also reserve § 20.2053–1(d)(6) to provide
future guidance on the issue of the
appropriate application of present-value
principles in determining the amount
deductible under section 2053. These
proposed regulations address this issue.
In addition, these proposed regulations
provide or clarify rules under section
2053 addressing the deductibility of
interest expense accruing on tax and
penalties owed by an estate, the
deductibility of interest expense
accruing on certain loan obligations
incurred by an estate, requirements for
substantiating the value of a claim
against an estate that is deductible
under § 20.2053–4(b) or (c), and the
deductibility of amounts paid under a
decedent’s personal guarantee.

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II. Application of Present-Value
Principles to Amount Deductible Under
Section 2053
A. Issue Background
‘‘Present value’’ is a widely accepted
principle of accounting for the time
value of money. If a payor can defer
paying a dollar until a later time, the
payor can earn income on that dollar
until the date of payment. The longer a
payor can defer payment, the more
income the payor potentially can earn.
Taxpayers, the IRS, and courts regularly
employ present-value principles for
valuation and for other income tax and
transfer tax purposes. See, e.g., section
1274(b), §§ 1.642(c)–6, 20.7520–1, and
25.2512–5; Simpson et al. v. United
States, 252 U.S. 547 (1920);

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Commissioner v. Estate of Sternberger,
348 U.S. 187 (1955).
The deduction allowable under
section 2053 eliminates from taxation
under section 2001 that portion of the
gross estate that the estate expends or
necessarily will expend in paying
certain expenses and liabilities of the
estate and certain claims against the
estate. The expended portions of the
gross estate do not pass to the
decedent’s legatees, beneficiaries, or
heirs and, therefore, are not subject to
the estate tax. The 2009 Final
Regulations implement these principles
in determining the amount an estate
may deduct for certain claims and
expenses. Section 20.2053–1(d)(1)
generally limits the deduction under
section 2053 for certain claims and
expenses to the total amount actually
paid in settlement or satisfaction of that
item. Section 20.2053–1(d)(2) clarifies
that events occurring after the date of a
decedent’s death will be taken into
consideration in determining the
allowable deduction under section
2053.
Applying present-value principles to
determine the allowable deduction
under section 2053 for payments made
or to be made after an extended period
following a decedent’s death is
consistent with the principles
underlying section 2053 and the
approach of the 2009 Final Regulations.
By limiting the deduction to the
discounted amount of a payment or
payments made or to be made after an
extended period following the
decedent’s death, the gross estate is
reduced by a more accurate measure of
the amounts not passing to the heirs and
legatees. Accordingly, the Department of
the Treasury (Treasury Department) and
the IRS have determined that limiting
the amount deductible to the present
value of the amounts paid after an
extended post-death period will more
accurately reflect the economic realities
of the transaction, the true economic
cost of that expense or claim, and the
amount not passing to the beneficiaries
of the estate. Moreover, consistent with
the 2009 Final Regulations, this
approach treats the date of payment of
the otherwise deductible expense or
claim as a post-death event properly
taken into account under section 2053.
Rules applying present-value
principles to certain long-term
obligations were provided in proposed
regulations (REG–143316–03) published
in the Federal Register (72 FR 20080) on
April 23, 2007 (2007 Proposed
Regulations), which preceded the
issuance of the 2009 Final Regulations.
Specifically, the 2007 Proposed
Regulations required the computation of

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the present value of future payments for
a decedent’s noncontingent recurring
obligation, such as a noncontingent
recurring obligation to pay an annuity
amount under a property settlement
agreement. See § 20.2053–4(b)(7)(i) of
the 2007 Proposed Regulations.
However, that rule did not apply to
contingent recurring obligations. Rather,
amounts payable for a decedent’s
contingent recurring obligation became
deductible only as amounts were paid
by the estate in satisfaction of the claim
and the amount deductible equaled the
dollar amount actually paid. No
computation of present value factored
into the amount deductible for such
obligations. See § 20.2053–4(b)(7)(ii) of
the 2007 Proposed Regulations.
The preamble to the 2009 Final
Regulations indicated that the Treasury
Department and the IRS found
persuasive criticism of those proposed
rules by commenters suggesting they
produced an inconsistent and
inequitable result. The 2009 Final
Regulations clarified that the amount
payable pursuant to a decedent’s
noncontingent recurring obligation is
deemed ascertainable with reasonable
certainty and, hence, deductible in
advance of payment under the rule in
§ 20.2053–1(d)(4), while the amount
payable pursuant to a decedent’s
contingent recurring obligation is not
ascertainable with reasonable certainty
and, hence, the amount deductible is
limited to amounts actually paid by the
estate in satisfaction of the claim. See
§ 20.2053–4(d)(6). However, the 2009
Final Regulations removed the presentvalue limitation applicable only to
noncontingent recurring obligations and
reserved § 20.2053–1(d)(6) to provide
future guidance on the issue.
With regard to a decedent’s
obligations that satisfy the requirements
for deductibility as described in the
preceding paragraph, whether such
obligations are recurring or
nonrecurring, there is no persuasive
technical or policy basis for limiting the
application of present-value principles
to payments made or to be made only
under noncontingent obligations.
Because discounting the amounts
actually paid or to be paid in the future
to determine the present value of the
payments is consistent with the purpose
of section 2053 of reducing the gross
estate only by the amounts not passing
to the heirs and legatees, these proposed
regulations propose to incorporate
present-value principles in determining
the amount deductible under section
2053. The proposed regulations will
apply present-value principles
consistently to expenses and claims
(whether contingent or noncontingent)

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that are deductible under section 2053.
The mechanics of applying presentvalue principles to expenses and claims,
including expenses and claims that are
deductible in advance of payment, are
described in section II.B of this
Background and Explanation of
Provisions.
B. Explanation of Provision
The Treasury Department and the IRS
propose to amend the regulations under
section 2053 to incorporate presentvalue principles in determining the
amount deductible under section 2053
for claims and expenses (excluding
unpaid mortgages and indebtedness
deductible under § 20.2053–7). The
Treasury Department and the IRS
recognize, however, that estates often
cannot pay every deductible claim and
expense within a short time after the
decedent’s death and that sound tax
administration should balance the
benefit of more accurately determining
the amounts not passing to the
beneficiaries of an estate garnered from
applying present-value principles with
the administrative burden of applying
those principles to deductible claims
and expenses that occur during a
reasonable period of administration of
the estate. The Treasury Department and
the IRS understand that a significant
percentage of estates pay most, if not all,
of their ordinary estate administration
expenses during the three-year period
following the decedent’s date of death.
This three-year period takes into
account a reasonable time for
administering and closing the estate.
The Treasury Department and the IRS
note that a reasonably short period of
time between the decedent’s death and
the payment of a claim prevents the lack
of a present-value discount from
significantly distorting the value of the
net (distributable) estate. Applying
present-value principles in computing
the deductible amount of those claims
and expenses paid more than three
years after the decedent’s death strikes
an appropriate balance between benefits
and burdens.
Accordingly, the Treasury Department
and the IRS propose to amend the
regulations under section 2053 to
require the discounting to present value
of certain amounts paid or to be paid in
settlement or satisfaction of certain
claims and expenses in determining the
amount deductible under section 2053.
Specifically, the rule in these proposed
regulations requires calculating the
present value of the amount of a
deductible claim or expense described
in section 2053(a) and § 20.2053–1(a)
that is not paid or to be paid on or
before the third anniversary of the

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decedent’s date of death, which threeyear period the proposed regulations
define as the ‘‘grace period.’’ The
proposed regulations provide the
general formula for calculating the
present value of such amounts and state
that the discount rate to be used in the
calculation is the applicable Federal rate
determined under section 1274(d) for
the month in which the decedent’s date
of death occurs, compounded annually.
The length of time from the decedent’s
death to the date of payment or
expected date of payment will
determine whether the Federal rate
applicable to that amount is the Federal
mid-term rate or the Federal long-term
rate. The proposed regulations provide
that any reasonable assumptions or
methodology in regard to time period
measurements may be used in
calculating the present value. In
addition, the proposed regulations
require a supporting statement to be
filed with the Form 706 showing any
calculations of present value.
The proposed regulations explain
how to calculate present value when the
amount of a claim or expense is
deductible in advance of the payment of
such amount, as under §§ 20.2053–
1(d)(4) and 20.2053–4(b) and (c). The
proposed regulations provide that the
expected date or dates of payment will
be used in computing present value and
that the expected date or dates of
payment will be determined by making
a fair and reasonable estimate using all
information reasonably available to the
taxpayer. For amounts deductible under
§ 20.2053–4(b) and (c), the proposed
regulations provide that the expected
date or dates of payment must be
identified in a written appraisal
document. Consistent with the rule in
§ 20.2053–1(d)(2), which takes into
consideration events occurring during
the post-death period described in that
section, the proposed regulations also
provide that the computation of present
value is subject to adjustment if the
actual date of payment differs from the
estimate used.
III. Deductibility of Interest Expense as
Administration Expense
A. Issue Background
Section 2053(a)(2) allows an estate to
deduct from the value of the gross estate
the amount of administration expenses
that are allowable by the law of the
jurisdiction in which the estate is being
administered. In some cases, interest
expense incurred by an estate may be a
deductible administration expense
under section 2053(a)(2) if the facts
support a finding that the expense
satisfies the requirements of section

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2053 and the regulations thereunder.
Several statutory and regulatory
provisions are relevant to the
deductibility of interest as an
administration expense under section
2053(a)(2).
First, effective for decedents dying
after December 31, 1997, section
2053(c)(1)(D) provides that, ‘‘no
deduction shall be allowed under
[section 2053] for any interest payable
under section 6601 on any unpaid
portion of the [Federal estate tax] for the
period during which an extension of
time for payment of such tax is in effect
under section 6166.’’
Second, § 20.2053–3(a) provides that
the amounts deductible from a
decedent’s gross estate as administration
expenses under section 2053(a)(2) are
limited to such expenses that actually
and necessarily are incurred in the
administration of the decedent’s estate.
The expenses contemplated in the law
are those that are associated with the
settlement of an estate and the transfer
of the property of the estate to
individual beneficiaries or to a trustee.
Expenditures not essential to the proper
settlement of the estate, but incurred for
the individual benefit of the heirs,
legatees, or devisees, may not be taken
as deductions.
Third, § 20.2053–1(b)(2) provides that
only expenses that are bona fide in
nature are deductible under section
2053. Section 20.2053–1(b)(2) applies to
any amounts deductible under section
2053(a) and (b), including deductible
administration expenses.
The issue of the extent to which and
the circumstances under which interest
expense satisfies the requirements for a
deductible administration expense
under section 2053(a)(2) and the
regulations thereunder is longstanding.
Over the past half century, a number of
litigated cases and sub-regulatory
published guidance items have
provided some clarity on the legal
issues surrounding the ability to deduct,
as an administration expense under
section 2053(a)(2), interest accruing on
deferred tax and penalties and on loan
obligations incurred by an estate.
Litigation on this fact-driven issue
continues in regard to interest accruing
on loan obligations incurred by an
estate.
The Treasury Department and the IRS
consider it appropriate to amend the
regulations under section 2053 to
address specifically the issue of interest
expense as a deductible administration
expense under section 2053(a)(2). In
particular, the Treasury Department and
the IRS propose to address interest
expense accruing after the death of the
decedent on any unpaid portion of tax

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or penalties and on a loan obligation
incurred by the estate to pay estate taxes
or other estate expenses.

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B. Explanation of Provisions
1. Interest Accruing on Unpaid Tax and
Penalties
In general, interest is payable at the
underpayment rate in section 6621 on
(i) any amount of unpaid Federal tax,
and (ii) any unpaid additions to tax,
additional taxes, and penalties (such
interest referred to in this preamble as
‘‘section 6601 interest’’ and such
additions to tax, additional taxes, and
penalties collectively referred to in this
preamble as ‘‘penalties’’). See section
6601(a) and (e)(2). However, interest
payable under section 6601 on unpaid
estate tax deferred under section 6166
(which includes interest accruing on
any such deferred payment during any
period when an extension of time for
payment is in effect under section
6161(a)(2)(B) with respect to that
payment) (referred to in this preamble
as ‘‘section 6166 interest’’) is subject to
a more favorable interest rate under
section 6601(j), and section
2053(c)(1)(D) provides that such interest
is not deductible. The statutory
prohibition of a deduction for section
6166 interest does not apply to ‘‘nonsection 6166 interest,’’ defined for
purposes of this preamble as any section
6601 interest other than section 6166
interest and interest payable on any
unpaid portion of state tax and penalties
pursuant to state law. Thus, non-section
6166 interest that accrues on and after
the decedent’s date of death may qualify
as a deductible administration expense
under section 2053(a)(2).
To determine the deductibility of nonsection 6166 interest accruing on and
after the decedent’s date of death, the
existing regulatory requirements in
§§ 20.2053–1(b)(2) and 20.2053–3(a)
apply. Non-section 6166 interest
satisfies the ‘‘bona fide’’ requirement in
§ 20.2053–1(b)(2) because such interest
accrues pursuant to either Federal or
state law. Non-section 6166 interest may
satisfy the ‘‘actually and necessarily
incurred’’ requirement in § 20.2053–
3(a), but such determination depends on
the facts and circumstances.
Non-section 6166 interest may accrue
on and after the date of a decedent’s
death on unpaid estate tax in
connection with an extension granted
under section 6161 (but not under
section 6161(a)(2)(B)) or a deferral
elected under section 6163. A section
6161 extension is granted upon a
showing of reasonable cause for
extending the time for payment. A
section 6163 deferral is appropriate

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when the value of a reversionary or
remainder interest is includible in the
gross estate, but such value is not
immediately available for payment of
the estate tax. The nature of both section
6161 extensions and section 6163
deferrals indicates they are based on a
demonstrable need to defer payment.
Accordingly, the Treasury Department
and the IRS have determined that
interest payable under section 6601 on
unpaid estate tax in connection with an
extension under section 6161 or a
deferral under section 6163 is
necessarily incurred in the
administration of the estate.
Non-section 6166 interest may accrue
on and after the date of a decedent’s
death on unpaid tax and penalties in
connection with an underpayment of
tax or a deficiency (as that term is
defined in section 6211). In many cases,
such interest and the underlying
underpayment of tax or deficiency is
attributable to the reasonable exercise of
an executor’s fiduciary duties in
administering the estate, as may occur
in cases involving legitimate
disagreements with the IRS, inadvertent
errors, or reasonable reliance on a
qualified professional. The Treasury
Department and the IRS have
determined that, generally, such interest
is actually and necessarily incurred in
the administration of the estate.
However, the Treasury Department and
the IRS are concerned that there are
some circumstances in which such
interest expense would not satisfy the
‘‘actually and necessarily incurred’’
requirement in § 20.2053–3(a). For
instance, when non-section 6166
interest accrues on unpaid tax and
penalties in connection with an
underpayment of tax or deficiency and
the underlying underpayment or
deficiency is attributable to an
executor’s negligence, disregard of the
rules or regulations (including careless,
reckless, or intentional disregard of
rules or regulations) as defined in
§ 1.6662–3(b)(2), or fraud with intent to
evade tax, the interest expense is not an
expense actually and necessarily
incurred in the administration of the
estate. Accordingly, the Treasury
Department and the IRS have
determined that, when interest accrues
on any unpaid tax or penalty and the
interest expense is attributable to an
executor’s negligence, disregard of the
rules or regulations, or fraud with intent
to evade tax, the interest expense is
neither actually and necessarily
incurred in the administration of the
estate nor essential to the proper
settlement of the estate. Further, the
Treasury Department and the IRS have

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determined that the rationale
underlying this determination applies to
all non-section 6166 interest, whether
the interest accrues in connection with
a deferral, underpayment, or deficiency.
The proposed regulations amend the
regulations under section 2053 to
confirm that section 6166 interest on
estate tax deferred under section 6166,
including interest accruing on an
installment under section 6166 during
the period of an extension of time for
payment under section 6161(a)(2)(B), is
not a deductible administration expense
under section 2053. The proposed
regulations also provide that nonsection 6166 interest that accrues on or
after the decedent’s date of death on any
unpaid tax or penalties may be
deductible to the extent permitted by
§§ 20.2053–1 and 20.2053–3(a). The
proposed regulations further provide
that non-section 6166 interest on estate
tax deferred under section 6161 or
section 6163 is actually and necessarily
incurred in the administration of the
estate because the grant of the extension
was based on a demonstrated need to
defer payment. Finally, the proposed
regulations provide that, in general,
non-section 6166 interest accruing postdeath on any unpaid tax or penalties in
connection with an underpayment of
tax or a deficiency is actually and
necessarily incurred in the
administration of the estate. However,
the proposed regulations provide that,
notwithstanding these rules, nonsection 6166 interest accruing on
unpaid tax and penalties on and after
the decedent’s date of death, whether in
connection with a deferral,
underpayment, or deficiency, is not
actually and necessarily incurred in the
administration of the estate and is not
deductible to the extent the interest
expense is attributable to an executor’s
negligence, disregard of applicable rules
or regulations (including careless,
reckless, or intentional disregard of
rules or regulations) as defined in
§ 1.6662–3(b)(2), or fraud with intent to
evade tax. Interest expense is
attributable to an executor’s negligence,
disregard of applicable rules or
regulations, or fraud with intent to
evade tax to the extent that the
underlying underpayment, deficiency,
or penalty is attributable to such
conduct by the executor. Similarly, even
when the underlying underpayment,
deficiency, or penalty is not attributable
to such conduct by the executor, interest
expense is attributable to an executor’s
negligence, disregard of applicable rules
or regulations, or fraud with intent to
evade tax to the extent the subsequent

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accrual of interest is attributable to such
conduct by the executor.
The rules in the proposed regulations
pertaining to whether non-section 6166
interest satisfies the requirement in
§ 20.2053–3(a) supplant the rule
reflected in Rev. Rul. 79–252, 1979–2
C.B. 333, and in the second holding of
Rev. Rul. 81–154, 1981–1 C.B. 470. (See
§ 601.601(d)(2)(ii)(b).) Together, these
two holdings create an implicit
presumption that interest accruing on
any unpaid portion of tax or penalties
in all cases satisfies the requirements for
a deductible administration expense,
which is inconsistent with the
requirement in § 20.2053–3(a) that the
expense be actually and necessarily
incurred in the administration of the
estate.
2. Interest Accruing on Certain Loan
Obligations Incurred by an Estate
The same requirements that apply for
deductible interest accruing on unpaid
tax and penalties also apply for
deductible interest accruing on loan
obligations incurred by an estate.
Interest accruing on a loan obligation
incurred by an estate satisfies the ‘‘bona
fide’’ requirement in § 20.2053–1(b)(2)
when both the interest expense and the
loan underlying the interest expense are
bona fide in nature and do not
constitute a transfer that is essentially
donative in character. Such interest
satisfies the ‘‘actually and necessarily
incurred’’ requirement in § 20.2053–3(a)
when the loan on which the interest
expense accrues and its terms are
necessary to the administration of the
decedent’s estate and are essential to the
proper settlement of the decedent’s
estate.
Among the reasons an estate might
enter into a loan arrangement is to
facilitate the payment of the estate’s
taxes and other liabilities or the
administration of the estate. Some
estates face genuine liquidity issues that
make it necessary to find a means to
satisfy their liabilities, and incurring a
loan obligation on which interest
accrues may be the only or best way to
obtain the necessary liquid funds.
However, if illiquidity has been created
intentionally (whether in the estate
planning, or by the estate with
knowledge or reason to know of the
estate tax liability) prior to the creation
of the loan obligation to pay estate
expenses and liabilities, the underlying
loan may be bona fide in nature but
most likely will not be found to be
actually and necessarily incurred in the
administration of the estate.
The issue of the deductibility of
interest expense accruing on a loan
obligation incurred by an estate has

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been litigated often, with varying
results. See, e.g., Estate of Black v.
Commissioner, 133 T.C. 340 (2009);
Estate of Graegin v. Commissioner, T.C.
Memo. 1988–477. In order to provide
guidance on the deductibility of interest
accruing on a loan obligation entered
into by the decedent’s estate to facilitate
the payment of the estate’s taxes and
other liabilities or the administration of
the estate, the Treasury Department and
the IRS propose to amend the
regulations under section 2053. The
proposed regulations provide that
interest expense is deductible only if: (i)
the interest accrues pursuant to an
instrument or contractual arrangement
that constitutes indebtedness under
applicable income tax regulations and
general principles of Federal tax law; (ii)
both the interest expense and the loan
on which interest expense accrues
satisfy the requirement of § 20.2053–
1(b)(2) that they are bona fide in nature;
and (iii) the loan on which interest
accrues and the loan’s terms are actually
and necessarily incurred in the
administration of the decedent’s estate
and are essential to the proper
settlement of the decedent’s estate
(within the meaning of § 20.2053–3(a)).
Finally, the proposed regulations
include a nonexclusive list of factors to
consider in determining whether
interest expense payable pursuant to
such a loan obligation of an estate
satisfies the requirements of §§ 20.2053–
1(b)(2) and 20.2053–3(a). In general, the
factors suggest that interest accruing on
a loan obligation may satisfy these
requirements when the loan and its
underlying terms are reasonable and
comparable to an arms-length loan
transaction and correspond to the
estate’s ability to satisfy the loan, and
the loan obligation is entered into by the
executor with a lender who is not a
substantial beneficiary of the decedent’s
estate (or an entity controlled by such a
beneficiary) at a time when there is no
viable alternative to obtain the
necessary liquid funds to satisfy estate
liabilities. In addition to providing
guidance on when interest accruing on
a loan obligation may satisfy the
requirements of §§ 20.2053–1(b)(2) and
20.2053–3(a), the list of factors may
suggest when the opposite is true and
interest accruing on a loan obligation
does not satisfy these requirements. For
instance, if, taken in their entirety, the
facts and circumstances indicate that
either the need for the loan or any of the
loan terms are contrived to generate, or
increase the amount of, a deduction for
the interest expense, the interest is not
deductible. Thus, if the lender is a
primary beneficiary of the estate (or an

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entity controlled by such beneficiary)
who may have liability for payment of
the estate tax or whose share of the
estate may bear the burden of estate
taxes and other liabilities, the facts
indicate the loan is not necessarily
incurred in the administration of the
estate and, therefore, indicate that any
interest accruing on the loan is not
necessarily incurred in the
administration of the estate. Further, if
the loan obligation carries an extended
loan term with a single balloon payment
that does not correspond with the
estate’s ability to satisfy the loan, the
facts indicate that the interest accruing
on the loan is not necessarily incurred
in the administration of the estate.
IV. Substantiation Requirements for
Valuations Performed Pursuant to
§ 20.2053–4(b) and (c)
A. Issue Background
Section 20.2053–4(b) and (c) provides
exceptions to the general rule in
§ 20.2053–4(a) that an estate may deduct
only amounts that actually are paid by
the estate in satisfaction of a claim.
Section 20.2053–4(b) generally allows a
deduction for the value of claims and
counterclaims in a related matter, and
§ 20.2053–4(c) allows a deduction for
the value of unpaid claims totaling not
more than $500,000. In each case,
certain requirements must be satisfied to
enable the estate to use these
exceptions.
One such requirement is that the
value of a claim against the estate that
may be deducted under either
§ 20.2053–4(b) or (c) must be
determined from a ‘‘qualified appraisal’’
performed by a ‘‘qualified appraiser’’
within the meaning of section 170 and
the regulations thereunder. The
Treasury Department and the IRS have
reconsidered this requirement. The
definition of ‘‘qualified appraiser’’ and
‘‘qualified appraisal’’ in the regulations
under section 170 were drafted in the
context of appraising an asset being
donated, and not a liability such as a
claim against an estate. Certain of the
elements of a qualified appraisal,
including references to the ‘‘date of
contribution,’’ and the requirements
necessary to meet the definition of a
‘‘qualified appraiser,’’ do not apply in
the context of valuing a claim against an
estate for purposes of determining the
value to be deducted from the gross
estate under section 2053.
The Treasury Department and the IRS
have determined that the rule in
§ 20.2053–4(b) and (c) should be
amended to remove the requirement
that the value be determined by a
‘‘qualified appraisal’’ performed by a

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‘‘qualified appraiser’’ within the
meaning of section 170 and the
regulations thereunder. Instead, the
Treasury Department and the IRS
propose to amend the regulations under
section 2053 to provide revised rules for
valuing claims for purposes of
§ 20.2053–4(b) and (c).

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B. Explanation of Provision
The Treasury Department and the IRS
propose to amend the regulations under
section 2053 to remove the requirement
in § 20.2053–4(b)(1)(iv) and (c)(1)(iv)
that valuations of the claims deductible
under § 20.2053–4(b) and (c) must be
supported by a ‘‘qualified appraisal’’
performed by a ‘‘qualified appraiser.’’
For purposes of determining the
allowable deduction under § 20.2053–
4(b) and (c), these proposed regulations
instead provide new requirements
intended to facilitate the appropriate
valuation of these claims.
Specifically, to determine the current
value of a claim deductible under
§ 20.2053–4(b) or (c), the proposed
regulations require a written appraisal
that adequately reflects the current
value of the claim when the Form 706
is being completed. The current value of
the claim should take into account postdeath events occurring prior to the time
a deduction is claimed as well as those
events reasonably anticipated to occur.
In addition, the proposed regulations
require the written appraisal to consider
all relevant facts and elements of value
that are known or that can be reasonably
anticipated at the time of the appraisal.
The written appraisal must be prepared,
signed, and dated by a person who is
qualified to appraise the claim being
valued, but who is not (i) a family
member of the decedent, a related entity
as to the decedent, or a beneficiary of
the decedent’s estate or revocable trust
(as those terms are defined in § 20.2053–
1(b)(2)(iii)), (ii) a family member of a
beneficiary or a related entity as to a
beneficiary (as those terms would be
defined in § 20.2053–1(b)(2)(iii) if
references therein to the decedent were
replaced with a reference to such
beneficiary, and without the limitations
based on the decedent’s date of death),
or (iii) an employee or other owner of
any of them. The appraisal also must
include a statement describing the basis
for the person’s qualification to appraise
the claim being valued.
V. Deductibility of Amounts Paid
Pursuant to Decedent’s Personal
Guarantee
A. Issue Background
A commenter responding to the 2007
Proposed Regulations suggested that the

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final regulations confirm that payments
made pursuant to a decedent’s personal
guarantee existing at the decedent’s
death are deductible in the same
manner as payments made in
satisfaction of any other deductible
claim against a decedent’s estate.
For payments made pursuant to a
decedent’s obligation as a guarantor of
indebtedness to be deductible, the claim
must represent a personal obligation of
the decedent existing at the time of the
decedent’s death, and the claim must be
enforceable against the decedent’s
estate. See § 20.2053–4(a)(1). However,
not all enforceable debts are deductible
under section 2053. A claim founded
upon a decedent’s guarantee is
considered a claim founded upon a
promise or agreement. Accordingly, the
deduction for such a claim is limited to
the extent that the guarantee was
contracted bona fide and in exchange
‘‘for an adequate and full consideration
in money or money’s worth.’’ See
section 2053(c)(1)(A) and § 20.2053–
4(d)(5). For a claim founded upon a
decedent’s guarantee to satisfy the
‘‘adequate and full consideration in
money or money’s worth’’ requirement
and, therefore, be deductible under
section 2053, the decedent must have
received a benefit reducible to money
value in exchange for the decedent’s
guarantee. See United States v. Stapf,
375 U.S. 118, 131 (1963) (‘‘Absent such
an . . . augmentation of the estate, a
testator could disguise transfers as
payments in settlement of debts and
claims and thus obtain deductions for
transmitting gifts.’’); Commissioner v.
Wemyss, 324 U.S. 303 (1945)
(construing the requirement of
‘‘adequate and full consideration in
money or money’s worth’’ in the gift tax
context to require a benefit to the donor
reducible to money value ‘‘to relieve a
transfer by him from being a gift.’’);
Estate of Theis v. Commissioner, 81 T.C.
741, 745, 748 (1983) (noting the
amounts at issue must have been
contracted bona fide and for full and
adequate consideration), aff’d 770 F.2d
981 (11th Cir. 1985).
Guarantor agreements often are
required in the context of a loan to the
guarantor’s closely-held business. In
these cases, the guarantor may be
motivated to enter into the guarantee
agreement to preserve the value of the
guarantor’s interest in the business. The
Treasury Department and the IRS have
determined that it is appropriate to
provide guidance on whether, for
purposes of section 2053, a guarantor
agreement is contracted for an adequate
and full consideration in money or
money’s worth in such a situation for
purposes of section 2053.

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When payments pursuant to a
decedent’s guarantee satisfy the
requirements for a deductible claim, the
amount deductible is limited to the
portion of the total claim due from and
actually paid by the estate, but reduced
by the amount recovered, or the amount
that could have been recovered, from
another party, insurance, or otherwise.
See §§ 20.2053–1(d)(1) and (3) and
20.2053–4(d)(3). Further, to avoid the
double-counting of a debt that occurs
when the debt both is taken into
account in computing the gross estate
and is taken as a section 2053
deduction, payments made pursuant to
the decedent’s guarantee are deductible
only to the extent that the debt for
which the guarantee is given has not
been taken into account in computing
the value of an asset includible in the
decedent’s gross estate.
A regulatory provision specifically
addressing the deductibility of claims
founded upon a decedent’s guarantee
will assist taxpayers in understanding
and meeting their tax responsibilities
and will result in consistent treatment
for similarly situated taxpayers.
B. Explanation of Provision
The proposed regulations provide that
a claim founded upon the decedent’s
agreement to personally guarantee a
debt of another is a claim founded on
a promise and, accordingly, must satisfy
the applicable requirements in section
2053(c)(1)(A) and § 20.2053–4(d)(5).
Specifically, the guarantee must have
been bona fide and in exchange for
adequate and full consideration in
money or money’s worth. The proposed
regulations confirm that the bona fide
nature of a claim related to the
guarantee of a debt of a family member,
a related entity, or a beneficiary will be
determined with reference to § 20.2053–
1(b)(2)(ii). The proposed regulations
provide a bright line rule that a
decedent’s agreement to guarantee a
bona fide debt of an entity in which the
decedent had control (within the
meaning of section 2701(b)(2)) at the
time of the guarantee satisfies the
requirement that the agreement be in
exchange for adequate and full
consideration in money or money’s
worth. Alternatively, the proposed
regulations provide that this
requirement also is satisfied if, at the
time the guarantee is given, the
maximum liability of the decedent
under the guarantee did not exceed the
fair market value of the decedent’s
interest in the entity. Finally, the
proposed regulations provide that the
estate’s right of contribution or
reimbursement will reduce the amount

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Federal Register / Vol. 87, No. 123 / Tuesday, June 28, 2022 / Proposed Rules
deductible in accordance with
§ 20.2053–1(d)(3).
Proposed Applicability Date
The regulations are proposed to apply
to the estate of each decedent dying on
or after the date of publication in the
Federal Register of a Treasury decision
adopting these rules as final regulations.
Effect on Other Documents
Rev. Rul. 79–252 (1979–2 C.B. 333)
states that interest on a Federal estate
tax deficiency is a necessary
administration expense under section
2053(a)(2) and is deductible to the
extent allowable under local law. Rev.
Rul. 81–154 (1981–1 C.B. 470) states, in
the second holding, that interest
incurred because of a late payment of
tax is deductible under section
2053(a)(2) to the extent it is allowable
under local law. Rev. Rul. 79–252 will
be obsoleted and Rev. Rul. 81–154 will
be modified, effective as of the date that
a Treasury decision adopting these rules
as final regulations is published in the
Federal Register.
Statement of Availability of IRS
Documents
IRS revenue procedures, revenue
rulings, notices, and other guidance
cited in this document are published in
the Internal Revenue Bulletin (or
Cumulative Bulletin) and are available
from the Superintendent of Documents,
U.S. Government Publishing Office,
Washington, DC 20402, or by visiting
the IRS website at https://www.irs.gov.
Special Analyses
Regulatory Planning and Review
This regulation is not subject to
review under section 6(b) of Executive
Order 12866 pursuant to the
Memorandum of Agreement (April 11,
2018) between the Treasury Department
and the Office of Management and
Budget regarding review of tax
regulations. Therefore, a regulatory
impact assessment is not required.

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Regulatory Flexibility Act
Pursuant to the Regulatory Flexibility
Act (5 U.S.C. chapter 6), it is hereby
certified that these regulations will not
have a significant economic impact on
a substantial number of small entities.
This certification is based on the fact
that these regulations primarily affect
estates of a decedent which generally
are not small entities under the Act.
Accordingly, these regulations are not
expected to have a significant economic
impact on a substantial number of small
entities, and a regulatory flexibility
analysis is not required.

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Pursuant to section 7805(f) of the
Code, these proposed regulations will be
submitted to the Chief Counsel for the
Office of Advocacy of the Small
Business Administration for comment
on their impact on small businesses.
Paperwork Reduction Act
The collections of information
contained in this notice of proposed
rulemaking have been submitted to the
Office of Management and Budget for
review in accordance with the
Paperwork Reduction Act of 1995 (44
U.S.C. 3507(d)), under Form 706, United
States Estate (and Generation-Skipping
Transfer) Tax Return, and assigned
control number 1545–0015. Comments
on the collection of information should
be sent to the Office of Management and
Budget, Attn: Desk Officer for the
Department of the Treasury, Office of
Information and Regulatory Affairs,
Washington, DC 20503, and to
Clearance Officer, SE:CAR:MP:T:T:SP,
Washington, DC 20224. Comments on
the collection of information should be
received by August 29, 2022. Comments
are specifically requested concerning:
Whether the proposed collections of
information are necessary for the proper
performance of the functions of the IRS,
including whether the information will
have practical utility;
The accuracy of the estimated burden
associated with the proposed collection
of information;
How the quality, utility, and clarity of
the information to be collected may be
enhanced;
How the burden of complying with
the proposed collections of information
may be minimized, including through
the application of automated collection
techniques or other forms of information
technology; and
Estimates of capital or start-up costs
of operation, maintenance, and
purchase of services to provide
information.
The collections of information in
these proposed regulations are in
proposed §§ 20.2053–1(d)(6)(iv) and
20.2053–4(b)(1)(iv) and (c)(1)(iv). The
information requested in § 20.2053–
1(d)(6)(iv) is necessary in order to
evaluate whether an estate is entitled to
a deduction in the amount claimed on
Form 706. The collection of information
is mandatory to obtain a benefit. The
information requested in § 20.2053–
4(b)(1)(iv) and (c)(1)(iv) is necessary in
order to evaluate whether an estate is
entitled to a deduction claimed on Form
706 and, if so, the amount of the
deduction. The collection of
information is mandatory to obtain a
benefit. The likely respondents are
estates of decedents seeking to deduct

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on Form 706 funeral expenses,
administration expenses, and/or certain
claims against the estate under section
2053.
Estimated total annual reporting
burden: 23,661 hours.
Estimated average annual burden per
respondent: 3 hours.
Estimated number of respondents:
7,887.
An agency may not conduct or
sponsor, and a person is not required to
respond to, a collection of information
unless the collection of information
displays a valid control number
assigned by the Office of Management
and Budget.
Books or records relating to a
collection of information must be
retained as long as their contents may
become material in the administration
of any internal revenue law. Generally,
tax returns and tax return information
are confidential, as required by 26
U.S.C. 6103.
Unfunded Mandates Reform Act
Section 202 of the Unfunded
Mandates Reform Act of 1995 (UMRA)
requires that agencies assess anticipated
costs and benefits and take certain other
actions before issuing a final rule that
includes any Federal mandate that may
result in expenditures in any one year
by a state, local, or tribal government, in
the aggregate, or by the private sector, of
$100 million (updated annually for
inflation). This proposed rule does not
include any Federal mandate that may
result in expenditures by state, local, or
tribal governments, or by the private
sector in excess of that threshold.
Executive Order 13132: Federalism
E.O. 13132, titled ‘‘Federalism,’’
prohibits an agency from publishing any
rule that has federalism implications if
the rule either imposes substantial,
direct compliance costs on state and
local governments, and is not required
by statute, or preempts state law, unless
the agency meets the consultation and
funding requirements of section 6 of the
E.O. This proposed rule does not have
federalism implications and does not
impose substantial direct compliance
costs on state and local governments or
preempt state law within the meaning of
the E.O.
Drafting Information
The principal authors of these
regulations are Karlene Lesho and
Melissa Liquerman, Office of the
Associate Chief Counsel (Passthroughs
and Special Industries). However, other
personnel from the Treasury
Department and the IRS participated in
their development.

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Comments and Public Hearing
Before these proposed regulations are
adopted as final regulations,
consideration will be given to any
comments that are submitted timely to
the IRS as prescribed in this preamble
under the ADDRESSES section. The
Treasury Department and the IRS
request comments on all aspects of the
proposed regulations.
Any electronic comments submitted,
and to the extent practicable, any paper
comments submitted, will be made
available at www.regulations.gov or
upon request.
A public hearing is being held by
teleconference on October 12, 2022, at
10:00 a.m. EST unless no outlines are
received by September 26, 2022.
The rules of 26 CFR 601.601(a)(3)
apply to the hearing. Persons who wish
to comment by telephone at the hearing
must submit electronic or written
comments and an outline of the topics
to be discussed and the time to be
devoted to each topic by September 26,
2022 as prescribed in the preamble
under the ADDRESSES section. A period
of ten minutes will be allotted to each
person for making comments (although
this rule may be waived in unusual
circumstances or for good cause shown).
After the deadline for receiving outlines
has passed, the IRS will prepare an
agenda containing the schedule of
speakers. Copies of the agenda will be
made available at www.regulations.gov,
search IRS and REG–130975–08. Copies
of the agenda will also be available by
emailing a request to publichearings@
irs.gov. Please put ‘‘REG–130975–08
Agenda Request’’ in the subject line of
the email.
Announcement 2020–4, 2020–17 IRB
667 (April 20, 2020), provides that until
further notice, public hearings
conducted by the IRS will be held
telephonically. Any telephonic hearing
will be made accessible to people with
disabilities.
List of Subjects in 26 CFR Part 20
Estate taxes, Reporting and
recordkeeping requirements.

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Proposed Amendments to the
Regulations
Accordingly, the IRS proposes to
amend 26 CFR part 20 as follows:
PART 20—ESTATE TAX; ESTATES OF
DECEDENTS DYING AFTER AUGUST
16, 1954
Paragraph 1. The authority citation
for part 20 continues to read in part as
follows:

■

Authority: 26 U.S.C. 7805.

*

*

*

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*

*

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Par. 2. Section 20.2053–1 is amended
by:
■ 1. Adding paragraph (d)(6).
■ 2. Revising the introductory text of
paragraph (d)(7).
■ 3. In paragraph (d)(7), Examples 1
through 3 are designated as paragraphs
(d)(7)(i) through (iii), respectively.
■ 4. In newly designated paragraphs
(d)(7)(i) and (ii):
■ i. Removing ‘‘ascertainable,’’ and
adding ‘‘ascertainable.’’ in its place.
■ ii. Adding a sentence to the end of the
paragraphs.
■ 5. In newly designated paragraph
(d)(7)(iii):
■ i. Removing ‘‘deduction,’’ and
‘‘Example 2’’ and adding ‘‘deduction.’’
and ‘‘paragraph (d)(7)(ii) of this section
(Example 2)’’ in their places,
respectively.
■ ii. Revising the last sentence of the
paragraph.
■ 6. Adding paragraphs (d)(7)(iv)
through (vi).
■ 7. Revising paragraph (f).
The additions and revisions read as
follows:
■

§ 20.2053–1 Deductions for expenses,
indebtedness, and taxes; in general.

*

*
*
*
*
(d) * * *
(6) Limitation on amount deductible—
(i) Claims and expenses paid after the
grace period—(A) Definitions. The
following definitions apply for purposes
of this paragraph (d):
(1) Grace period. The grace period is
the period beginning on the date of the
decedent’s death and extending through
the third anniversary of that date.
(2) Post-grace-period payment. A
post-grace-period payment is the
amount of a claim or expense described
in paragraph (a) of this section not paid
or to be paid before the end of the grace
period.
(B) General rule. To the extent that a
post-grace-period payment otherwise
meets the requirements for deductibility
of a claim or expense under section
2053 and the regulations in this part
thereunder, the amount deductible
under section 2053 is limited to the
present value, as of the decedent’s date
of death, of that amount. The present
value of each post-grace-period payment
is calculated by discounting it from the
payment date or expected date of
payment to the decedent’s date of death.
The applicable discount rate is the
applicable Federal rate determined
under section 1274(d) for the month in
which the decedent’s death occurs,
compounded annually. The length of
time from the decedent’s date of death
to the date of payment or expected date
of payment will determine whether the

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Federal rate applicable to that payment
is the Federal mid-term rate or the
Federal long-term rate. The Internal
Revenue Service publishes the
applicable Federal rates for each month
in the Internal Revenue Bulletin (see
§ 601.601(d)(2)(ii) of this chapter). Any
reasonable assumptions and
methodology in regard to time period
measurements may be used to calculate,
in accordance with paragraph (d)(6)(ii)
of this section, the present value of the
post-grace-period payment(s).
(ii) Calculating present value of
amounts paid or payable—(A) Single
post-grace-period payment. The amount
deductible under section 2053 for a
single post-grace-period payment is
computed by calculating the present
value of such payment as follows:
Amount of future payment × [1 ÷ (1 +
i)]t
Where:
t is the amount of time (expressed in years
and fractions of years) from the day after
the decedent’s date of death to the
payment date or expected date of
payment; and
i is the applicable discount rate.

(B) Multiple post-grace-period
payments. The amount deductible
under section 2053 for multiple postgrace-period payments is computed by
calculating the present value of each
such payment using the formula in
paragraph (d)(6)(ii)(A) of this section;
the sum of the discounted amounts of
the post-grace-period payments is the
amount that is deductible for such
payments.
(C) Multiple payment dates occurring
during and after the grace period. A
claim or expense described in paragraph
(a) of this section may have at least one
payment date or expected date of
payment during the grace period and at
least one payment date or expected date
of payment after the grace period. For
such a claim or expense, the amount
deductible under section 2053 is
computed by calculating the present
value of each separate post-grace-period
payment using the formula in paragraph
(d)(6)(ii)(A) of this section, and adding
the total of these discounted amounts to
any amount of the claim or expense
having a payment date or expected date
of payment during the grace period. Any
amount having a payment date or
expected date of payment during the
grace period is not discounted in
arriving at the amount deductible.
(iii) Discounting when actual date of
payment is unknown. With regard to a
post-grace-period payment that may be
deducted in advance of payment under
paragraph (d)(4) of this section or
§ 20.2053–4(b) or (c), the amount

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deductible must be determined by
computing the present value of the
amount of that post-grace-period
payment as if that amount will be paid
on the expected date of payment. The
expected date of payment in settlement
or satisfaction of a claim or expense
must be determined using all
information reasonably available to the
taxpayer to make a fair and reasonable
estimate of the expected date or dates of
payment. For amounts deductible under
§ 20.2053–4(b) or (c), the expected date
or dates of payment must be identified
in a written appraisal document of a
person that is qualified by knowledge
and experience to appraise the claim
being valued. See § 20.2053–4(b)(1)(iv)
and (c)(1)(iv). However, the
computation of present value is subject
to adjustment if, within the period
described in paragraph (d)(2) of this
section, the actual date or dates of
payment become known and differ from
the estimated date or dates of payment.
See paragraph (d)(6)(vi) of this section.
(iv) Statement supporting present
value computation required. A
deduction under section 2053 for a
claim or expense that is required to be
discounted to present value under
paragraph (d)(6)(i) of this section must
be supported by a statement to be filed
with the Form 706 showing the
computation of the present value of that
item, including, if applicable, the basis
for the determination of the expected
date(s) of payment.
(v) Ordering rule. In computing the
amount deductible for a claim or
expense under paragraph (d) of this
section, the amount deductible for a
claim or expense (otherwise determined
under paragraphs (d)(1) through (4) of
this section) is discounted to present
value under paragraph (d)(6) of this
section before applying the limits in
§ 20.2053–4(b)(2) and (c).
(vi) Effect of post-death events. If a
deduction is claimed for the present
value of a post-grace-period payment,
the claimed deduction is subject to
adjustment to reflect any post-death
events affecting the amount of such
post-grace-period payment and any
change in the expected or actual date of
payment. See paragraph (d)(2) of this
section for the period during which
post-death events are taken into
account.
(vii) Exceptions. The rule in
paragraph (d)(6)(i) of this section does
not apply to unpaid principal of
mortgages and other indebtedness
deductible under § 20.2053–7.
(7) Examples. Assume that the
amounts described in section 2053(a)

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are payable out of property subject to
claims and are allowable by the law of
the jurisdiction governing the
administration of the estate, whether the
applicable jurisdiction is within or
outside of the United States. Assume
that, unless otherwise provided, the
claims against the estate are not
deductible under § 20.2053–4(b) or (c)
and all amounts are paid during the
grace period. The following examples
illustrate the application of this
paragraph (d):
(i) * * * However, any amounts that
will not be paid on or before the third
anniversary of the date of D’s death (that
is, are not paid during the grace period)
are subject to the present value
limitation in paragraph (d)(6) of this
section.
(ii) * * * If the amount of the claim
will not be paid on or before the third
anniversary of the date of D’s death (that
is, the amount is not paid during the
grace period), the amount deductible is
subject to the present value limitation in
paragraph (d)(6) of this section.
(iii) * * * At that time, a deduction
will be allowed for the amount that is
either paid or meets the requirements of
paragraph (d)(4) of this section for
deducting certain ascertainable
amounts, subject to the present value
limitation in paragraph (d)(6) of this
section, if applicable.
(iv) Example 4: Discounting amount
paid more than three years after
decedent’s date of death. The facts are
the same as in paragraph (d)(7)(ii) of this
section (Example 2) except that E files
a timely protective claim for refund in
accordance with paragraph (d)(5) of this
section to preserve the estate’s right to
claim a refund, a final judgment in the
amount of $100x is entered against and
paid by the estate precisely five years
after D’s date of death, and the
applicable Federal (mid-term) rate
determined under section 1274(d) for
the month in which D’s date of death
occurs, compounded annually, is
2.00%. Within a reasonable period of
time after the final judgment is entered,
E notifies the Commissioner that the
contingency has been resolved. E may
claim a deduction for the present value
of the amount paid in satisfaction of the
claim as of D’s date of death. Under the
facts in this paragraph (d)(7)(iv), the
present value of the amount paid in five
years equals $100x/(1 + .0200)5 or
$100x/1.104081 or $90.57x.
(v) Example 5: Discounting amount to
be paid when actual date of payment
not known. The facts are the same as in
paragraph (d)(7)(ii) of this section

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(Example 2) except that the claim is
deductible under § 20.2053–4(c) because
all amounts deducted by the estate
under that paragraph do not exceed
$500,000. E obtains a written appraisal
document meeting the requirements of
§ 20.2053–4(c)(iv) and reasonably
determines that the future value of the
claim is $300,000 (that is, before
discounting the claim to its present
value). E determines, after considering
all available information and making
reasonable assumptions, that the
expected date of payment of the claim
is Date X, which is reflected in the
appraisal. Date X is a date after the third
anniversary of D’s date of death. E may
claim a deduction for the present value
of the claim as of D’s date of death,
determined by discounting $300,000 for
the period from the date of death to Date
X, using the applicable Federal rate
determined under section 1274(d) for
the month in which D’s death occurs,
compounded annually.
(vi) Example 6: Discounting amount
to be paid for series of payments
payable over a period that does not end
on or before the third anniversary of the
decedent’s death. Pursuant to the terms
of a divorce and separation agreement
entered on June 1 of Year 1, Decedent
(D) is obligated to make annual
payments of $100x to Claimant (C) on
September 1 of year 1 and each
September 1st thereafter until D has
made a total of 10 such payments. D
dies on December 1 of Year 5 after
having made the first five annual
payments required under the agreement.
The applicable Federal (mid-term) rate
determined under section 1274(d) for
the month in which D’s death occurs,
compounded annually, is 2.00%. The
executor of D’s estate (E) may claim a
deduction with respect to C’s claim on
D’s Form 706 under the special rule
contained in paragraph (d)(4) of this
section because the deductible amount
can be ascertained with reasonable
certainty. E computes the discounted
deductible amount of the claim by
adding the undiscounted amount of the
three payments that will be made before
the third anniversary of D’s death
($300x) to the discounted amounts of
the two payments that will be made
after the third anniversary of D’s death.
Accordingly, the amount deductible for
the claim equals $483.866x ($300x +
$92.843x + $91.023x). The individual
calculations for the present values of the
payments in the last two years of the
payment obligation are shown in table
1 to this paragraph (d)(7)(vi).

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TABLE 1 TO PARAGRAPH (d)(7)(vi)
(1)

(2)

(3)

(4)

(5)

t

1+i

1/(1 + i)

[1/(1 + i)]t

[1/(1 + i)]t × 100x

Year 9 ..........................................................................
Year 10 ........................................................................

*

*
*
*
*
(f) Applicability date. The rules of this
section apply to the estates of decedents
dying on or after [date of publication of
the final rule in the Federal Register].
■ Par. 3. Section 20.2053–3 is amended
by:
■ 1. Redesignating paragraphs (d) and
(e) as paragraphs (e) and (f),
respectively.
■ 2. Adding a new paragraph (d).
■ 3. Revising newly redesignated
paragraph (f).
The addition and revision read as
follows:
§ 20.2053–3 Deduction for expenses of
administering estate.

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(d) Interest expense incurred in
administering the estate—(1) Interest
payable under section 6601 on unpaid
tax—(i) Section 6166 interest. As used
in paragraph (d)(1) of this section, the
phrase ‘‘section 6166 interest’’ means
interest payable under section 6601 on
unpaid estate tax deferred under section
6166. This includes interest accruing on
an installment or other payment under
section 6166 during the period of an
extension of time for making that
payment under section 6161(a)(2)(B).
Section 6166 interest is not deductible
pursuant to section 2053(c)(1)(D).
(ii) Non-section 6166 interest. As used
in paragraph (d)(1) of this section, the
phrase ‘‘non-section 6166 interest’’
means interest payable under section
6601 or under state or local law other
than section 6166 interest. Non-section
6166 interest that accrues on or after the
decedent’s date of death on any unpaid
tax or penalties may be deductible to the
extent permitted by § 20.2053–1 and
this section. For purposes of paragraph
(d)(1) of this section, penalties include
any unpaid additions to tax, additional
taxes, and penalties. When non-section
6166 interest accrues on unpaid estate
tax deferred under section 6161 or
section 6163, the interest expense is
actually and necessarily incurred in the
administration of the estate for purposes
of paragraph (a) of this section because
the extension was based on a
demonstrated need to defer payment.
When non-section 6166 interest accrues
on and after the date of a decedent’s
death on any unpaid tax or penalties in

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3.75
4.75

1.0200
1.0200

connection with an underpayment of
tax or a deficiency, the interest expense
generally is actually and necessarily
incurred in the administration of the
estate for purposes of paragraph (a) of
this section.
(iii) Exception. Notwithstanding
paragraph (d)(1)(ii) of this section, nonsection 6166 interest accruing on
unpaid tax and penalties on and after
the decedent’s date of death, whether in
connection with a deferral,
underpayment, or deficiency, is not
actually and necessarily incurred in the
administration of the estate for purposes
of paragraph (a) of this section and is
not deductible to the extent the interest
expense is attributable to an executor’s
negligence, disregard of applicable rules
or regulations (including careless,
reckless, or intentional disregard of
rules or regulations) as defined in
§ 1.6662–3(b)(2) of this chapter, or fraud
with intent to evade tax. Interest
expense is attributable to an executor’s
negligence, disregard of applicable rules
or regulations, or fraud with intent to
evade tax to the extent that the
underlying deferral, underpayment, or
deficiency, is attributable to such
conduct by the executor. Similarly, even
when the underlying deferral,
underpayment, or deficiency is not
attributable to such conduct by the
executor, the interest expense is
attributable to an executor’s negligence,
disregard of the rules or regulations, or
fraud with intent to evade tax to the
extent the subsequent accrual of interest
is attributable to such conduct by the
executor.
(iv) Examples. The following
examples illustrate the application of
this paragraph (d)(1). In each example,
the decedent (D) dies on October 1, Year
1, and the estate tax return is due July
1 of the following calendar year, Year 2.
In each example, except as expressly
stated, there is no negligence, disregard
of applicable rules or regulations, or
fraud on the part of the executor.
(A) Example 1. On July 1, Year 2, the
executor of D’s estate (E) timely files the
estate tax return based on values
determined in good faith and pays
$500,000, which is the estate tax shown
on the return. Upon examination, the
Internal Revenue Service (IRS) makes an
adjustment to the value of an asset

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0.980392
0.980392

0.928430
0.910226

92.843x
91.023x

includible in the gross estate, resulting
in a $25,000 increase in estate tax due.
E initially contests the adjustment, but
eventually agrees to the assessment of
the deficiency in the amount of $25,000.
Interest on the deficiency is payable
under section 6601 in the amount of $X.
E makes a payment in satisfaction of the
assessed deficiency and interest. For
purposes of paragraph (a) of this section,
the interest expense in the amount of $X
is considered actually and necessarily
incurred in the administration of D’s
estate, and its deduction reduces the
amount of the deficiency.
(B) Example 2. The executor of D’s
estate (E) files the estate tax return and
pays the estate tax shown on the return
($500,000) on July 1 of Year 3, one year
after the due date. On August 1, Year 3,
the IRS assesses interest on the unpaid
tax under section 6601 in the amount of
$X, assesses late filing and late payment
penalties in accordance with section
6651 in the amount of $Y, and issues a
notice and demand for payment of $X
and $Y. On August 1, Year 4, E makes
payment to the IRS of $Z, which is the
total amount due for $X and $Y, as well
as interest that accrued on these
amounts from August 1, Year 3, to
August 1, Year 4, payable under section
6601. The facts establish that E’s failure
to timely file the return and timely pay
the tax and failure to pay the assessed
interest and penalties within the period
provided in the notice and demand is a
result of E’s disregard of the rules for
filing the return and paying the tax and
any assessed penalties. Under the facts
in this paragraph (d)(1)(iv)(B), neither
the interest payable under section 6601
that accrued on the unpaid tax before
notice and demand nor the interest that
accrued on the unpaid tax and penalties
after notice and demand is an expense
that is actually and necessarily incurred
in the administration of D’s estate for
purposes of paragraph (a) of this section.
(C) Example 3. Prior to D’s death, the
IRS had assessed an income tax
deficiency against D for the 2009 tax
period in the amount of $75,000, and
penalties in the amount of $X. The
assessed tax and penalties remained
unpaid on D’s date of death. On July 1,
Year 2, the executor of D’s estate (E)
timely files the estate tax return and
timely pays the estate tax shown on the

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return to be due. On the same date, E
also pays all claims against and
liabilities of the estate, except for the
assessed income tax deficiency and
penalties for the 2009 tax period.
Despite E’s awareness that the estate
had sufficient liquidity and funds to
satisfy all estate liabilities, including the
2009 income tax deficiency and
penalties, E does not pay the assessed
income tax deficiency, penalties, and
accrued interest until July 1, Year 4. E’s
failure to pay the assessed income tax
deficiency and penalties for the 2009 tax
period is a result of E’s disregard of
applicable rules or regulations. Even
though the underlying income tax
deficiency is not attributable to E’s
negligence, disregard of applicable
rules, or fraud with intent to evade tax,
the interest that accrued after July 1,
Year 2, on the assessed deficiency and
penalties is attributable to E’s disregard
of applicable rules or regulations.
Accordingly, the post-July 1, Year 2,
interest is not an expense that is
actually and necessarily incurred in the
administration of D’s estate.
(2) Interest expense on certain loan
obligations of the estate. Interest on a
loan entered into by the estate to
facilitate the payment of the estate’s tax
and other liabilities or the
administration of the estate may be
deductible depending on all the facts
and circumstances. To be a deductible
administration expense, interest
expense must arise from an instrument
or contractual arrangement that
constitutes indebtedness under
applicable income tax regulations and
general principles of Federal tax law. In
addition, the interest expense and the
loan to which interest expense relates
must satisfy the requirement of
§ 20.2053–1(b)(2) that they are bona fide
in nature based on all the facts and
circumstances. Further, both the loan to
which the interest expense relates and
the loan terms must be actually and
necessarily incurred in the
administration of the decedent’s estate
and must be essential to the proper
settlement of the decedent’s estate. See
paragraph (a) of this section. If the facts
and circumstances establish that the
interest expense arises from an
instrument or contractual arrangement
that constitutes indebtedness under
general principles of Federal tax law,
factors that collectively may support a
finding that the interest expense also
satisfies the additional requirements
under § 20.2053–1(b)(2) and paragraph
(a) of this section include, but are not
limited to, the following:
(i) The interest rate on and the terms
of the underlying loan (whether
between related or unrelated parties),

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including any prepayment penalty, are
reasonable given all the facts and
circumstances and comparable to an
arms-length loan transaction;
(ii) The underlying loan is entered
into by an executor of the decedent’s
estate acting in the capacity of executor
or, if no executor is appointed and
acting, the person accountable for
satisfying the liabilities of the estate;
(iii) The lender properly includes
amounts of paid and/or accrued interest
(including original issue discount as
determined under sections 1271 through
1275 and the regulations in this part
under those sections, such as original
issue discount attributable to stated
interest that is treated as part of the
stated redemption price at maturity
because it is not payable at least
annually) in gross income for Federal
income tax purposes, particularly if the
lender is a family member of the
decedent, a related entity, or a
beneficiary of the decedent’s estate or
trust (as defined in § 20.2053–
1(b)(2)(iii));
(iv) The loan proceeds are used to
satisfy estate liabilities that are essential
to the proper settlement of the estate,
including, but not limited to, the
Federal estate tax liability;
(v) The loan term and payment
schedule correspond to the estate’s
anticipated ability to make the
payments under, and to satisfy, the loan,
and the loan term does not extend
beyond what is reasonably necessary;
(vi) The only practical alternatives to
the loan are the sale of estate assets at
prices that are significantly belowmarket, the forced liquidation of an
entity that conducts an active trade or
business, or some similar financially
undesirable course of action;
(vii) The underlying loan is entered
into when the estate’s liquid assets are
insufficient to satisfy estate liabilities,
the estate does not have control (within
the meaning of section 2701(b)(2)) of an
entity that has liquid assets sufficient to
satisfy estate liabilities, the estate has no
power to direct or compel an entity in
which it has an interest to sell liquid
assets to enable the estate to satisfy its
liabilities, and the estate’s assets are
expected to generate sufficient cash flow
or liquidity to make the payments
required under the loan;
(viii) The estate’s illiquidity does not
occur after the decedent’s death as a
result of the decedent’s testamentary
estate plan to create illiquidity;
similarly, the illiquidity does not occur
post-death as a deliberate result of the
action or inaction of the executor who
then had both knowledge or reason to
know of the estate tax liability and a
reasonable alternative to that action or

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inaction that could have avoided or
mitigated the illiquidity;
(ix) The lender is not a beneficiary of
a substantial portion of the value of the
estate, and is not an entity over which
such a beneficiary has control (within
the meaning of section 2701(b)(2)) or the
right to compel or direct the making of
the loan;
(x) The lender or lenders are not
beneficiaries of the estate whose
individual share of liability under the
loan is substantially similar to his or her
share of the estate; and
(xi) The decedent’s estate has no right
of recovery of estate tax against, or of
contribution from, the person loaning
the funds.
*
*
*
*
*
(f) Applicability date. The rules of this
section apply to the estates of decedents
dying on or after [date of publication of
the final rule in the Federal Register].
■ Par. 4. Section 20.2053–4 is amended
by:
■ 1. Revising paragraphs (b)(1)(iv),
(b)(2), and (c)(1)(iv) and (v), the second
sentence of paragraph (c)(3), paragraph
(d)(5), and paragraph (d)(7)(iii)
introductory text.
■ 2. In paragraph (d)(7)(iii), Examples 1
through 9 are designated as paragraphs
(d)(7)(iii)(A) through (I), respectively.
■ 3. In newly designated paragraph
(d)(7)(iii)(A), removing ‘‘decision,’’ and
‘‘§ 20.2053–3(c) or § 20.2053–3(d)(3)’’
adding ‘‘decision.’’ and ‘‘§ 20.2053–3(c)
or (d)(3)’’ in their places, respectively.
■ 4. In newly designated paragraphs
(d)(7)(iii)(B) and (C), removing
‘‘payment,’’, ‘‘Example 1’’, and
‘‘§ 20.2053–3(c) or § 20.2053–3(d)(3)’’
and adding ‘‘payment.’’, ‘‘paragraph
(d)(7)(iii)(A) of this section (Example
1)’’, and ‘‘§ 20.2053–3(c) or (d)(3)’’ in
their places, respectively.
■ 5. In newly designated paragraph
(d)(7)(iii)(D), removing ‘‘defendants,’’,
‘‘Example 1’’, and ‘‘§ 20.2053–3(c) or
§ 20.2053–3(d)(3)’’ and adding
‘‘defendants.’’, ‘‘paragraph (d)(7)(iii)(A)
of this section (Example 1)’’, and
‘‘§ 20.2053–3(c) or (d)(3)’’ in their
places, respectively.
■ 6. In newly designated paragraph
(d)(7)(iii)(E), removing ‘‘payment,’’,
‘‘Example 1’’, and ‘‘§ 20.2053–3(c) or
§ 20.2053–3(d)(3)’’ and adding
‘‘payment.’’, ‘‘paragraph (d)(7)(iii)(A) of
this section (Example 1)’’, and
‘‘§ 20.2053–3(c) or (d)(3)’’ in their
places, respectively.
■ 7. In newly designated paragraph
(d)(7)(iii)(F), removing ‘‘claims,’’ and
‘‘§ 20.2053–3(c) or § 20.2053–3(d)(3)’’
and adding ‘‘claims.’’ and ‘‘§ 20.2053–
3(c) or (d)(3)’’ in their places,
respectively.

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8. In newly designated paragraph
(d)(7)(iii)(G), removing ‘‘enforceability,’’
and adding ‘‘enforceability.’’ in its
place.
■ 9. In newly designated paragraph
(d)(7)(iii)(H), removing ‘‘estate,’’ and
adding ‘‘estate.’’ in its place.
■ 10. In newly designated paragraph
(d)(7)(iii)(I), removing ‘‘satisfaction,’’
and adding ‘‘satisfaction.’’ in its place.
■ 11. Adding paragraph (d)(7)(iii)(J).
■ 12. Revising paragraph (f).
The revisions and addition read as
follows:
■

§ 20.2053–4
the estate.

Deduction for claims against

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(b) * * *
(1) * * *
(iv) The value of each such claim
against the estate is supported by a
written appraisal document to be filed
with the Form 706, United States Estate
(and Generation-Skipping Transfer) Tax
Return, or successor form, and the
written appraisal document—
(A) Adequately reflects post-death
events that have occurred prior to the
date on which a deduction is claimed
on an estate’s Form 706;
(B) Reports, considers, and
appropriately weighs all relevant facts
and elements of value as are known or
are reasonably determinable at the time
of the appraisal, including the
underlying facts of the claim against the
estate, potential litigating risks, and the
current status of the claim and
procedural history;
(C) Takes into account post-death
events reasonably anticipated to occur;
(D) Identifies an expected date or
dates of payment (for purposes of
determining the applicability of the
present value limitation in § 20.2053–
1(d)(6));
(E) Explains in detail the methods and
analysis that support the appraisal’s
conclusions;
(F) Is prepared, signed under
penalties of perjury, and dated by a
person who is qualified by knowledge
and experience to appraise the claim
being valued and is not a family
member of the decedent, a related
entity, or a beneficiary of the decedent’s
estate or revocable trust (as those terms
are defined in § 20.2053–1(b)(2)(iii)), a
family member of a beneficiary or a
related entity as to a beneficiary (as
those terms would be defined in
§ 20.2053–1(b)(2)(iii) if references
therein to the decedent were replaced
with a reference to such beneficiary, and
without regard to the limitations in
§ 20.2053–1(b)(2)(iii) based on the
decedent’s date of death), or an
employee or other owner of any of them;
and

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(G) Includes a statement providing the
basis for the person’s qualifications to
appraise the claim being valued;
*
*
*
*
*
(2) Limitation on deduction. The
deduction under this paragraph (b) is
limited to the value of the related claims
or particular assets included in
decedent’s gross estate. See § 20.2053–
1(d)(6)(v) for the impact of the present
value limitation.
*
*
*
*
*
(c) * * *
(1) * * *
(iv) The value of each such claim
against the estate is supported by a
written appraisal document to be filed
with the Form 706, United States Estate
(and Generation-Skipping Transfer) Tax
Return, or successor form, and the
written appraisal document—
(A) Adequately reflects post-death
events that have occurred prior to the
date on which a deduction is claimed
on an estate’s Form 706;
(B) Reports, considers and
appropriately weighs all relevant facts
and elements of value as are known or
reasonably determinable at the time of
the appraisal, including the underlying
facts of the claim against the estate,
potential litigating risks, and the current
status of the claim and procedural
history;
(C) Takes into account post-death
events reasonably anticipated to occur;
(D) Identifies an expected date or
dates of payment (for purposes of
determining the applicability of the
present value limitation in § 20.2053–
1(d)(6));
(E) Explains in detail the methods and
analysis that support the appraisal’s
conclusions;
(F) Is prepared, signed under
penalties of perjury, and dated by a
person who is qualified by knowledge
and experience to appraise the claim
being valued, and is not a family
member of the decedent, a related
entity, or a beneficiary of the decedent’s
estate or revocable trust (as those terms
are defined in § 20.2053–1(b)(2)(iii)), a
family member of a beneficiary or a
related entity as to a beneficiary (as
those terms would be defined in
§ 20.2053–1(b)(2)(iii) if references
therein to the decedent were replaced
with a reference to such beneficiary, and
without regard to the limitations in
§ 20.2053–1(b)(2)(iii) based on the
decedent’s date of death), or an
employee or other owner of any of them;
and
(G) Includes a statement providing the
basis for the person’s qualifications to
appraise the claim being valued;
(v) The total amount deducted by the
estate under paragraph (c) of this section

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does not exceed $500,000 (see
§ 20.2053–1(d)(6)(v) for the impact of
the present value limitation);
*
*
*
*
*
(3) * * * Assume that each claim is
paid within three years after the
decedent’s death, and that the value of
each claim is determined from a written
appraisal document that meets the
requirements of paragraph (c)(1)(iv) of
this section. * * *
(d) * * *
(5) Claims founded upon a promise—
(i) In general. To be deductible, a claim
founded on a promise must represent a
personal obligation of the decedent
existing at the time of the decedent’s
death, and the claim must be
enforceable against the decedent’s
estate. In addition, except with regard to
pledges or subscriptions (see § 20.2053–
5), the deduction for a claim founded
upon a promise or agreement is limited
to the extent that the promise or
agreement was bona fide and in
exchange for adequate and full
consideration in money or money’s
worth; that is, the promise or agreement
must have been bargained for at arm’s
length and the price must have been an
adequate and full equivalent reducible
to money value.
(ii) Decedent’s promise to guarantee a
debt. A deduction for a claim founded
upon a decedent’s agreement to
guarantee a debt of another is a claim
founded on a promise and is subject to
the limitation in paragraph (d)(5)(i) of
this section. For purposes of section
2053, a decedent’s agreement to
guarantee a debt of an entity in which
the decedent had an interest at the time
the guarantee was given satisfies the
requirement that the agreement be in
exchange for adequate and full
consideration in money or money’s
worth if, at the time the guarantee was
given, the decedent had control (within
the meaning of section 2701(b)(2)) of the
entity. Alternatively, this requirement is
satisfied to the extent the maximum
liability of the decedent under the
guarantee did not exceed, at the time the
guarantee was given, the fair market
value of the decedent’s interest in the
entity. The bona fide nature of the
decedent’s agreement to guarantee a
debt of a family member, a related
entity, or a beneficiary (as defined in
§ 20.2053–1(b)(2)(iii)) is determined in
accordance with § 20.2053–1(b)(2)(ii).
For a claim otherwise deductible under
this paragraph (d)(5)(ii), the estate’s
right of contribution or reimbursement
will reduce the amount deductible in
accordance with § 20.2053–1(d)(3).
Payments made pursuant to the
decedent’s guarantee of a debt are

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Federal Register / Vol. 87, No. 123 / Tuesday, June 28, 2022 / Proposed Rules
deductible only to the extent that the
debt for which the guarantee is given
has not been taken into account in
computing the value of the gross estate
under § 20.2053–7 or otherwise.
*
*
*
*
*
(7) * * *
(iii) The claimant (C) is not a family
member, related entity, or beneficiary of
the estate of decedent (D), unless
otherwise provided, and is not the
executor (E).
*
*
*
*
*
(J) Example 10: Guarantee. On Date 1,
D entered into a guarantee agreement
with Bank (C) to secure financing for a
closely-held business (LLC) in which D
had a controlling interest. LLC was
solvent at the time LLC executed a
promissory note in the amount of $100x
in favor of C. Prior to D’s death, LLC
became insolvent and stopped making
payments on the note. After D’s death,
C filed a claim against D’s estate for
payment of the remaining balance due
under the note and E paid the full
amount due. Although E had a right of
contribution against LLC for primary
payment of the indebtedness, LLC was
insolvent and no part of the debt was
collectible at the time E deducted the
payment. D’s estate may deduct the
amount paid to C in satisfaction of D’s
liability under the guarantee agreement.
The guarantee agreement is considered
to have been contracted for an adequate
and full consideration in money or
money’s worth. The result would be the
same if D did not have control of LLC
as long as the fair market value of D’s
interest in the LLC on Date 1 was at least
$100x.
*
*
*
*
*
(f) Applicability date. The rules of this
section apply to the estates of decedents
dying on or after [date of publication of
the final rule in the Federal Register].
Paul J. Mamo,
Acting Deputy Commissioner for Services and
Enforcement.
[FR Doc. 2022–13706 Filed 6–24–22; 4:15 pm]
BILLING CODE 4830–01–P

DEPARTMENT OF LABOR

khammond on DSKJM1Z7X2PROD with PROPOSALS

29 CFR Parts 1910 and 1926
[Docket No. OSHA–2018–0004]
RIN 1218–AD10

Advance Notice of Proposed Rule
Making (ANPRM)—Blood Lead Level
for Medical Removal
Occupational Safety and Health
Administration (OSHA), Labor.

AGENCY:

VerDate Sep<11>2014

16:16 Jun 27, 2022

Jkt 256001

Advance Notice of Proposed
Rulemaking (ANPRM).

ACTION:

OSHA is considering
rulemaking to revise its standards for
occupational exposure to lead based on
medical findings since the issuance of
OSHA’s lead standards that adverse
health effects in adults can occur at
Blood Lead Levels (BLLs) lower than the
medical removal level (≥60 mg/dL in
general industry, ≥50 mg/dL in
construction) and lower than the level
required under current standards for an
employee to return to their former job
status (<40 mg/dL).1 The agency is
seeking input on reducing the current
BLL triggers in the medical surveillance
and medical removal protection
provisions of the general industry and
construction standards for lead. The
agency is also seeking input about how
current ancillary provisions in the lead
standards can be modified to reduce
worker BLLs.
DATES: Submit comments on or before
August 29, 2022.
ADDRESSES: You may submit comments
and attachments, identified by Docket
No. OSHA–2018–0004, electronically at
www.regulations.gov, which is the
Federal e-Rulemaking Portal. Follow the
instructions online for making
electronic submissions.
Instructions: All submissions must
include the agency’s name and the
docket number for this ANPRM (Docket
No. OSHA–2018–0004). When
uploading multiple attachments into
Regulations.gov, please number all of
your attachments because
www.regulations.gov will not
automatically number the attachments.
For example, Attachment 1—title of
your document, Attachment 2—title of
your document, Attachment 3—title of
your document, etc. When submitting
comments or recommendations on the
issues that are raised in this ANPRM,
commenters should explain their
rationale and, if possible, provide data
and information to support their
comments or recommendations.
Wherever possible, please indicate the
title of the person providing the
information and the type and number of
employees at your worksite.
All comments, including any personal
information you provide, will be placed
in the public docket without change and
SUMMARY:

1 OSHA’s standard for lead in general industry
expresses blood lead in units of mg/100g of whole
blood. The standard for lead in construction
expresses blood lead in units of mg/dL, which the
agency explained is essentially equivalent to mg/
100g of whole blood (29 CFR 1926.62, Appendix A,
II.B.3: Health Protection Goals of the Standard). For
simplicity, this ANPRM expresses blood lead in
units of mg/dL throughout.

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38343

will be publicly available online at
www.regulations.gov. Therefore, OSHA
cautions commenters about submitting
information they do not want to be
made available to the public or
submitting materials that contain
personal information (either about
themselves or others) such as Social
Security Numbers and birthdates.
Docket: To read or download
comments or other material in the
docket, go to Docket No. OSHA–2018–
0004 at www.regulations.gov. All
comments and submissions are listed in
the www.regulations.gov index;
however, some information (e.g.,
copyrighted material) is not publicly
available to read or download through
that website. All submissions, including
copyrighted material, are available for
inspection at the OSHA Docket Office.
Documents submitted to the docket by
OSHA or stakeholders are assigned
document identification numbers
(Document ID) for easy identification
and retrieval. The full Document ID is
the docket number plus a unique fourdigit code. OSHA is identifying
supporting information in this ANPRM
by author name and publication year,
when appropriate. This information can
be used to search for a supporting
document in the docket at https://
www.regulations.gov. Contact the OSHA
Docket Office at 202–693–2350 (TTY
number: 877–889–5627) for assistance
in locating docket submissions.
FOR FURTHER INFORMATION CONTACT:
Press Inquiries: Contact Frank
Meilinger, Director, Office of
Communications, U.S. Department of
Labor; telephone (202) 693–1999; email
[email protected].
General and technical information:
Contact Andrew Levinson, Acting
Director, Directorate of Standards and
Guidance, U.S. Department of Labor;
telephone (202) 693–1950; email
[email protected].
SUPPLEMENTARY INFORMATION: The
Supplementary Information section
follows this outline:
Table of Contents
I. Background
A. Events Leading to This Action
B. Industry Profile Information
C. Health Effects of Lead Exposure
II. Request for Input
A. Blood Lead Triggers for Medical
Removal Protection
B. Medical Surveillance Provisions
C. Permissible Exposure Limit (PEL)
D. Personal Protective Equipment (PPE),
Hygiene, and Training
E. Safe Harbor Compliance Protocols
F. Environmental Effects
G. Duplicative, Overlapping, or Conflicting
Rules

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