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TITLE 26-INTERNAL REVENUE CODE tance acquires, subject to such obligation, from the decedent an interest in property of the decedent. (2) Depletion In the case of the deduction specified in sec- tion 611, to the person described in subsection (a)(1)(A), (B), or (C) who, in the manner de- scribed therein, receives the income to which the deduction relates, in the taxable year when such income is received. (c) Deduction for estate tax (1) Allowance of deduction (A) General rule A person who includes an amount in gross income under subsection (a) shall be al- lowed, for the same taxable year, as a de- duction an amount which bears the same ratio to the estate tax attributable to the net value for estate tax purposes of all the Items described in subsection (a)(1) as the value for estate tax purposes of the items of gross income or portions thereof in respect of which such person included the amount in gross income (or the amount included in gross income, whichever is lower) bears to the value for estate tax purposes of all the items described in subsection (a)(1). (B) Estates and trusts In the case of an estate or trust, the amount allowed as a deduction under sub- paragraph (A) shall be computed by exclud- ing from the gross income of the estate or trust the portion (if any) of the items de- scribed in subsection (a)(1) which is proper- ly paid, credited, or to be distributed to the beneficiaries during the taxable year. (2) Method of computing deduction For purposes of. paragraph (1)- (A) The term "estate tax" means Federal and State estate taxes (within the meaning of section 1023(f)(3)). (B) The net value for estate tax purposes of all the items described in subsection (a)(1) shall be the excess of the value for estate tax purposes of all the items de- scribed in subsection (a)(1) over the deduc- tions from the gross estate in respect of claims which represent the deductions and credit described in subsection (b). Such net vajue shall be determined with respect to the provisions of section 421(c)(2), relating to the deduction for estate tax with respect to stock options to which part II of sub- chapter D applies. (C) The estate tax attributable to such net value shall be an amount which bears the same ratio to the estate tax as such net value bears to the value of the gross estate. (3) Special rule for generation-skipping transfers For purposes of this section- (A) the tax imposed by section 2601 or any State inheritance tax described in sec- tion 2602(c)(5)(C) on any generation-skip- ping transfer shall be treated as a tax im- posed by section 2001 on the estate of the deemed transferor (as defined in section 2612(a)); (B) any property transferred in such a transfer shall be treated as if it were includ- ed in the gross estate of the deemed trans- feror at the value of such property taken into account for purposes of the tax im- posed by section 2601; and (C) under regulations prescribed by the Secretary, any item of gross income subject to the tax imposed under section 2601 shall be treated as income described in subsection (a) if such item is not properly includible in the gross income of the trust on or before the date of the generation-skip ping transfer (within the meaning of section 2611(a)) and if such transfer occurs at or after the death of the deemed transferor (as so defined). (d) Amounts received by surviving annuitant under joint and survivor annuity contract (1) Deduction for estate tax For purposes of computing the deduction under subsection (c)(1)(A), amounts received by a surviving annuitant- (A) as an annuity under a joint and survi- vor annuity contract where the decedent annuitant died after December 31, 1953, and after the annuity starting date (as defined in section 72(c)(4)), and (B) during the surviving annuitant's life expectancy period, shall, to the extent in- cluded in gross income under section 72, be considered as amounts included in gross income under subsection (a). (2) Net value for estate tax purposes In determining the net value for estate tax purposes under subsection (c)(2)(B) for pur- poses of this subsection, the value for estate tax purposes of the items described in para- graph (1) of this subsection shall be comput- ed- (A) by determining the excess of the value of the annuity at the date of the death of the deceased annuitant over the total amount excludable from the gross income of the surviving annuitant under section 72 during the surviving annuitant's life expec- tancy period, and (B) by multiplying the figure so obtained by the ratio which the value of the annuity for estate tax purposes bears to the value of the annuity at the date of the death of the deceased. (3) Definitions For purposes of this subsection-- (A) The term "life expectancy period" means the period beginning with the first day of the first period for which an amount is received by the surviving annuitant under the contract and ending with the close of the taxable year with or in which falls the termination of the life expectancy of the surviving annuitant. For purposes of this subparagraph, the life expectancy of the surviving annuitant shall be determined, as of the date of the death of the deceased an- nuitant, with reference to actuarial tables prescribed by the Secretary. (B) The surviving annuitant's expected return under the contract shall be comput- ed, as of the death of the deceased annu- itant, with reference to actuarial tables pre- scribed by the Secretary. § 691 Page 480