77TH CONG. , 2D SESS.-CH. 619-OCT. 21, 1942 whole or in part, under such chapter had it been in effect at such time. "(4) COMMUNITY PROPERTY. -For the purposes of this subsec- tion, premiums or other consideration paid with property held as community property by the insured and surviving spouse under the law of any State, Territory, or possession of the United States, or any foreign country, shall be considered to have been paid by the insured, except such part thereof as may be shown to have been received as compensation for personal services actually rendered by the surviving spouse or derived originally from such compensation or from separate property of the surviving spouse; and the term 'incidents of ownership' includes incidents of ownership possessed by the decedent at his death as manager of the community." (b) LIABILITY OF LIFE INSURANCE BENEFIcIARErs. -Section 826 (c) (relating to apportionment of liability of beneficiaries) is amended to read as follows: "(c) LIABILrr OF LIFE INSURANCE BENFICIARIES.- Unless the decedent directs otherwise in his will, if any part of the gross estate upon which tax has been paid consists of proceeds of policies of insur- ance upon the life of the decedent receivable by a beneficiary other than the executor, the executor shall be entitled to recover from such beneficiary such portion of the total tax paid as the proceeds of such policies bear to the sum of the net estate and the amount of the exemption allowed in computing the net estate, determined under section 935 (c). If there is more than one such beneficiary the executor shall be entitled to recover from such beneficiaries in the same ratio." (c) DECEDENTS TO WHICH AMENDMENTs APPLICABLE.-The amend- ments made by subsection (a) shall be applicable only to estates of decedents dying after the date of the enactment of this Act; but in determining the proportion of the premiums or other consideration paid directly or indirectly by the decedent (but not the total pre- miums paid) the amount so paid by the decedent on or before Janu- ary 10, 1941, shall be excluded if at no time after such date the decedent possessed an incident of ownership in the policy. SEC. 405. DEDUCTIONS NOT ALLOWABLE IN EXCESS OF CERTAIN PROPERTY OF ESTATE. (a) GENERAL RULE. -Section 812 (b) (relating to estate tax deduc- tions) is amended by inserting after the second sentence the following new sentences: "There shall be disallowed the amount by which the deductions specified in paragraphs (1), (2), (3), (4), and (5) exceed the value, at the time of the decedent's death, of property subject to claims. For the purposes of this section the term 'property subject to claims' means property includible in the gross estate of the decedent which, or the avails of which, would, under the applicable law, bear the burden of the payment of such deductions in the final adjustment and settlement of the estate; and, for the purposes of this definition, the value of the property shall be reduced by the amount of the deduc- tion under the next sentence attributable to such property." (b) PRIOR TAXED PRoPERTr.- The second sentence of the second paragraph of section 812 (c) (relating to deduction for prior taxed property) is amended to read as follows: "The deduction under this subsection shall be reduced by an amount which bears the same ratio to the amounts allowed as deductions under subsections (a) and (d) and the amounts of general claims allowed as deductions under sub- section (b) as the amount otherwise deductible under this subsection 65714--43--PT. I 60 945 "Incidents of owner. ship." 63 Stat. 128 . 26U. .C. 826(c). Po0t, p. 961. 63 Stat. 142. 26U.S.C.i93 (c). Poai. p . 951. 53 Stat. 123 . 26U. .C.1812(b). PotL p. 947. "Property subject to claims." 53 Stat. 124 . 26U. .C..Supp.I 812(c). Pot,pp. 947, 948. 56 STAT.]
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