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TITLE 26-INTERNAL REVENUE CODE (F) property described in section 1014(b)(5). (3) $10,000 exclusion for certain assets (A) Exclusion The term "carryover basis property" does not include any asset- (I) which, in the hands of the decedent, was a personal or household effect, and (it) with respect to which the executor has made an election under this para- graph. (B) Limitation The fair market value of all assets desig- nated under this subsection with respect to any decedent shall not exceed $10,000. (C) Election An election under this paragraph with re- spect to any asset shall be made by the ex- ecutor not later than the date prescribed by section 6075(a) for filing the return of the tax imposed by section 2001 or 2101 (includ- ing extensions thereof), and shall be made in such manner as the Secretary shall by regulations prescribe. (c) Increase in basis for Federal and State estate taxes attributable to appreciation The basis of appreciated carryover basis prop- erty (determined after any adjustment under subsection (h)) which is subject to the tax im- posed by section 2001 or 2101 in the hands of the person acquiring it from the decedent shall be increased by an amount which bears the same ratio to the Federal and State estate taxes as- (1) the net appreciation in value of such property, bears to (2) the fair market value of all property which is subject to the tax imposed by section 2001 or 2101. (d) $60,000 minimum for baaes of carryover basis properties (1) In general If $60,000 exceeds the aggregate bases (as determined after any adjustment under sub- section (h) or (c)) of all carryover basis prop- erty, the basis of each appreciated carryover basis property (after any adjustment under subsection (h) or (c)) shall be increased by an amount which bears the same ratio to the amount of such excess as- (A) the net appreciation in value of such property, bears to (B) the net appreciation in value of all such property. (2) Special rule for personal or household effect For pirposes of paragraph (1), the basis of any pxopcrty which is a personal or house- hold effect shall be treated as not greater than the fair market value of such property. (3) Nonres',dent not citizen This subsection shall not apply to any car- ryover basis property acquired from any dece- dent who was (at the time of his death) a nonresident not a citizen of the United States. (e) Further increase in basis for certain state succes- sion tax paid by transferee of property If- (1) any person acquires appreciated car- ryover basis property from a decedent, and (2) such person actually pays an amount of estate, inheritance, legacy, or succession taxes with respect to such property to any State or the District of Columbia for which the estate is not liable, then the basis of such property (after any ad- justment under subsection (h), (c), or (d)) shall be increased by an amount which bears the same ratio to the aggregate amount of all such taxes paid by such person as- (A) the net appreciation in value of such property, bears to (B) the fair market value of all property acquired by such person which Is subject to such taxes. (f) Special rules and definitions for application of subsection (c), (d), and (e) (1) Fair market value limitation The adjustments under subsections (c), (d), and (e) shall not increase the basis of proper- ty above its fair market value. (2) Net appreciation For purposes of this section, the net appre- ciation in value of any property is the amount by which the fair market value of such prop- erty exceeds the adjusted basis of such prop- erty immediately before the death of the de- cedent (as determined after any adjustment under subsection (h)). For purposes of subsec- tion (d), such adjusted basis shall be in- creased by the amount of any adjustment under subsection (c), and, for purposes of sub- section (e), such adjusted basis shall be in- creased by the amount of any adjustment under subsection (c) or (d). (3) Federal and State estate taxes For purposes of subsection (c), the term "Federal and State estate taxes" means- (A) the tax imposed by section 2001 or 2101, reduced by the credits against such tax, and (B) any estate, inheritance, legacy, or suc- cession taxes, for which the estate is liable, actually paid by the estate to any State or the District of Columbia. (4) Certain marital and charitable deduction prop- erty treated as not subject to tax For purposes of subsections (c) and (e), property shall be treated as not subject to a tax- (A) with respect to the tax imposed by section 2001 or 2101, to the extent that a deduction is allowable with respect to such property under section 2055 or 2056 or under section 2106(a)(2), and (B) with respect to State estate taxes and with respect to the State taxes referred to in subsection (e)(2), to the extent that such property is not subject to such taxes. (5) Appreciated carryover basis property For purposes of this section, the term "ap- preciated carryover basis property" means any carryover basis property if the fair market value of such property exceeds the Page 643 § 1023