Previously Taxed Property and the Federal Estate Tax

In 1918 Congress added to the then simple but rapidly proliferatingestate tax law a deduction for property previously taxed, the prototypeof today\u27s section 812(c).1 In recommending the new provision, theHouse Committee on Ways and Means said: It has come to the attention of the committee that persons closely related have died within such a short space of time that the same estate passing within a short period of time has been subjected to the estate tax, and thereby diminished unreasonably because of the short period within which the two levies have been made. For example, a husband dies leaving a large amount of property to his wife, an elderly woman, who dies within a few weeks after her husband\u27s death. Under existing law the entire estate is taxed on the transfer from husband to wife and on the transfer from wife to other beneficiaries. To alter this result the Committee recommended and Congress adopteda provision allowing the executor to deduct from the decedent\u27s grossestate any part thereof that was received by the decedent, directly or byexchange, from the taxable estate of any other person who had died withinthe previous five years. The provision was simple and straightforwar