FOREIGN ESTATE TAX CREDIT.

SEC. 603. FOREIGN ESTATE TAX CREDIT. (a) Credit Against Basic Estate Tax.—Section 813 (relating to credits against estate tax) is hereby amended by adding at the end thereof the following new subsection: “(c) Same—Paid to Foreign Countries.— “(1) In general.—The tax imposed by section 810 shall be credited with the amount of any estate, inheritance, legacy, or succession taxes actually paid to any foreign country in respect of any property situated within such foreign country and included in the gross estate (not including any such taxes paid with respect to the estate of a person other than the decedent). If the decedent at the time of his death was not a citizen of the United States, credit shall not be allowed under this subsection unless the foreign country of which such decedent was a citizen or subject, in imposing such taxes, allows a similar credit in the case of a citizen of the United States resident in such country. The determination of the country within which property is situated shall be made in accordance with the rules applicable under 65 Stat. 564 Part III of this subchapter in determining whether property is situated within or without the United States. “(2) Limitations on credit.— The credit provided in this subsection with respect to such taxes paid to any foreign country— “(A) shall not, with respect to any such tax, exceed an amount which bears the same ratio to the amount of such tax actually paid to such foreign country as the value of property which is— “(i) situated within such foreign country, “(ii) subjected to such tax, and “(iii) included in the gross estate bears to the value of all property subjected to such tax; and “(B) shall not, with respect to all such taxes, exceed an amount which bears the same ratio to the tax imposed by section 810 (after deducting from such tax the credits provided by subsections (a) and (b) of this section) as the value of property which is— “(i) situated within such foreign country, “(ii) subjected to the taxes of such foreign country, and “(iii) included in the gross estate bears to the value of the entire gross estate reduced by the aggregate amount of the deductions allowed under subsections (c), (d), and (e) of section 812. “(3) Valuation of property.— “(A) The values referred to in the ratio stated in paragraph (2) (A) are the values determined for the purposes of the tax imposed by such foreign country. “(B) The values referred to in the ratio stated in paragraph (2) (B) are the values determined under this chapter; but, in applying such ratio, the value of any property described in clauses (i), (ii), and (iii) thereof shall be reduced by such amount as will properly reflect, in accordance with regulations prescribed by the Secretary, the deductions allowed in respect of such property under subsections (c), (d), and (e) of section 812. “(4) Proof of credit.—The credits provided in this subsection and in section 936 (c) shall be allowed only if the taxpayer establishes to the satisfaction of the Secretary (A) the amount of taxes actually paid to the foreign country, (B) the amount and date of each payment thereof, (C) the description and value of the property in respect of which such taxes are imposed, and (D) all other information necessary for the verification and computation of the credits. “(5) Period of limitation.— The credits provided in this subsection and in section 936 (c) shall be allowed only for such taxes as were actually paid and credit therefor claimed within four years after the filing of the return required by section 821, except that— “(A) If a petition for redetermination of a deficiency has been filed with The Tax Court of the United States within the time prescribed in section 871, then within such four-year period or before the expiration of 60 days after the decision of The Tax Court becomes final. “(B) If, under section 822 (a) (2) or section 871 (h), an extension of time has been granted for payment of the tax shown on the return, or of a deficiency, then within such four-year period or before the date of the expiration of the period of the extension. 65 Stat. 565 Refund based on such credits may (despite the provisions of sections 910 to 912, inclusive) be made if claim therefor is filed within the period above provided. Any such refund shall be made without interest.” (b) Credit Against Additional Estate Tax.—Section 936 (relating to credits against estate tax) is hereby amended by adding at the end thereof the following new subsection: “(c) Estate, Etc., Taxes Paid to Foreign Countries.— “(1) In General.—In the case of the estate of a citizen or resident of the United States, the tax imposed by section 935 shall be credited with the amount of any estate, inheritance, legacy, or succession taxes actually paid to any foreign country in respect of any property situated within such foreign country and included in the gross estate (not including any such taxes paid with respect to the estate of a person other than the decedent). If the decedent at the time of his death was not a citizen of the United States, credit shall not be allowed under this subsection unless the foreign country of which such decedent was a citizen or subject, in imposing such taxes, allows a similar credit in the case of a citizen of the United States resident in such country. The determination of the country within which property is situated shall be made in accordance with the rules applicable under Part III of subchapter A in determining whether property is situated within or without the United States. “(2) Limitations on credit.— The credit provided in this subsection with respect to such taxes paid to any foreign country— “(A) shall not exceed the amount by which such taxes paid to the foreign country exceed the amount of the credit allowed therefor under section 813 (c); and “(B) shall not exceed an amount which bears the same ratio to the tax imposed by section 935 (after deducting from such tax the credit provided by subsection (b) of this section) as the value of property which is— “(i) situated within such foreign country, “(ii) subjected to the taxes of such foreign country, and “(iii) included in the gross estate bears to the value of the entire gross estate reduced by the aggregate amount of the deductions allowed under subsections (c), (d), and (e) of section 812. “(3) Same—special rules.— “(A) For the purposes of paragraph (2) (A), ‘such taxes paid to the foreign country’ shall, with respect to any tax paid to the foreign country, be the amount computed under section 813 (c) (2) (A). “(B) The values referred to in the ratio stated in paragraph (2) (B) are the values determined under this chapter; but, in applying such ratio, the value of any property described in clauses (i), (ii), and (iii) thereof shall be reduced by such amount as will properly reflect, in accordance with regulations prescribed by the Secretary, the deductions allowed in respect of such property under subsections (c), (d),and (e) of section 812. “(4) Proof of credit.— “For provisions relating to proof of credit, see section 813 (c) (4). “(5) Period of limitation.— “For provisions relating to period of limitation on claiming 65 Stat. 566 of credit or refund based thereon and nonpayment of interest on refund, see section 813 (c) (5).” (c) Reversionary or Remainder Interest.—Section 927 (relating to credit for State death taxes) is hereby amended to read as follows: “SEC. 927. CREDIT FOR DEATH TAXES. “Such part of any estate, inheritance, legacy, or succession taxes allowable as a credit under section 813 (b) or (c) against the tax imposed by this subchapter, or under section 936 (c) against the tax imposed by subchapter B, as is attributable to such reversionary or remainder interest may be allowed as a credit against the tax attributable to such interest, subject to the limitations on the amount of credit contained in such sections, if such part is paid, and credit therefor claimed, at any time prior to the expiration of 60 days after the termination of the precedent interest or interests in the property.” (d) Extension of Period of Limitations, Etc., in Case of Recovery of Taxes Claimed as Credit.—Section 874 (b) (relating to exceptions to general rule as to period of limitation upon assessment and collection of estate tax) is hereby amended by inserting at the end thereof the following new paragraph: “(3) Recovery of taxes claimed as credit.—If any tax claimed as a credit under section 813 (b) or (c) or section 936 (c) is recovered from any foreign country, any State, any Territory or possession of the United States, or the District of Columbia, the executor, or any other person or persons recovering such amount, shall give notice of such recovery to the Secretary at such time and in such manner as may be required by regulations prescribed by him, and the Secretary shall redetermine the amount of the tax under this chapter and the amount, if any, of the tax due upon such redetermination, shall be paid by the executor or such person or persons, as the case may be, upon notice and demand.” (e) Effective Date.—The amendments made by this section shall be applicable with respect to estates of decedents dying after the date of the enactment of this Act.