missioner in pursuance of law), the value of the gross estate shall be determined by valuing all the property included therein on the date of the decedent's death as of the date one year after the decedent's death, except that (1) property included in the gross estate on the date of death and, within one year after the decedent's death, distributed by the executor (or, in the case of property included in the gross estate under subsection (c), (d), or (f) of this section, distributed by the trustee under the instrument of transfer), or sold, exchanged, or otherwise disposed of, shall be included at its value as of the time of such distribution, sale, exchange, or other disposition, which- ever first occurs, instead of its value as of the date one year after the decedent's death, and (2) any interest or estate which is affected by mere lapse of time shall be included at its value as of the time of death (instead of the later date) with adjustment for any differ- ence in its value as of the later date not due to mere lapse of time. No deduction under this subchapter of any item shall be allowed if allowance for such item is in effect given by the valuation under this subsection. Wherever in any other subsection or section of this chapter, reference is made to the value of property at the time of the decedent's death, such reference shall be deemed to refer to the value of such property used in determining the value of the gross estate. In case of an election made by the executor under this subsection, then for the purposes of the deduction under section 812 (d) or sec- tion 861 (a) (3), any bequest, legacy, devise, or transfer enumer- ated therein shall be valued as of the date of decedent's death with adjustment for any difference in value (not due to mere lapse of time or the occurrence or nonoccurrence of a contingency) of the property as of the date one year after the decedent's death (sub- stituting the date of sale or exchange in the case of property sold or exchanged during such one-year period). (k) CRoss REFERENCE. - For provision that relinquishment of marital estates shall not be deemed a consideration "in money or money's worth", see section 812 (b). SEC. 812. NET ESTATE. For the purpose of the tax the value of the net estate shall be deter- mined, in the case of a citizen or resident of the United States by deducting from the value of the gross estate- (a) EXEMPrION. -An exemption of $100,000; (b) EXPENSES, LOSSES, INDEBTEDNESS, AND TAXES.- Suchl amounts- 1) for funeral expenses, 2) for administration expenses, (3) for claims against the estate, (4) for unpaid mortgages upon, or any indebtednes in respect to, property where the value of decedent's interest therein, undimin- ished by such mortgage or indebtedness, is included in the value of the gross estate, and (5) reasonably required and actually expended for the support during the settlement of the estate of those dependent upon the decedent, as are allowed by the laws of the jurisdiction, whether within or with- out the United States, under which the estate is being administered, but not including any income taxes upon income received after the death of the decedent, or property taxes not accrued before his death, or any estate, succession, legacy, or inheritance taxes. The deduction herein allowed in the case of claims against the estate, unpaid mort- gages, or any indebtedness shall, when founded upon a promise or agreement, be limited to the extent that they were contracted bona fide and for an adequate and full consideration in money or money's worth. There shall also be deducted losses incurred during the settlement of estates arising from fires, storms, shipwrecks, or other casualties, or from theft, when such losses are not compensated for by insurance or ESTATE TAX 123
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