26 C.F.R. § 20.2040-1

Joint interests

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(a) In general. A decedent's gross estate includes under section 2040 the value of property held jointly at the time of the decedent's death by the decedent and another person or persons with right of survivorship, as follows:

(1) To the extent that the property was acquired by the decedent and the other joint owner or owners by gift, devise, bequest, or inheritance, the decedent's fractional share of the property is included.

(2) In all other cases, the entire value of the property is included except such part of the entire value as is attributable to the amount of the consideration in money or money's worth furnished by the other joint owner or owners. See § 20.2043-1 with respect to adequacy of consideration. Such part of the entire value is that portion of the entire value of the property at the decedent's death (or at the alternate valuation date described in section 2032 which the consideration in money or money's worth furnished by the other joint owner or owners bears to the total cost of acquisition and capital additions. In determining the consideration furnished by the other joint owner or owners, there is taken into account only that portion of such consideration which is shown not to be attributable to money or other property acquired by the other joint owner or owners from the decedent for less than a full and adequate consideration in money or money's worth.

The entire value of jointly held property is included in a decedent's gross estate unless the executor submits facts sufficient to show that property was not acquired entirely with consideration furnished by the decedent, or was acquired by the decedent and the other joint owner or owners by gift, bequest, devise, or inheritance.

(b) Meaning of “property held jointly”. Section 2040 specifically covers property held jointly by the decedent and any other person (or persons), property held by the decedent and spouse as tenants by the entirety, and a deposit of money, or a bond or other instrument, in the name of the decedent and any other person and payable to either or the survivor. The section applies to all classes of property, whether real or personal, and regardless of when the joint interests were created. Furthermore, it makes no difference that the survivor takes the entire interest in the property by right of survivorship and that no interest therein forms a part of the decedent's estate for purposes of administration. The section has no application to property held by the decedent and any other person (or persons) as tenants in common.

(c) Examples. The application of this section may be explained in the following examples in each of which it is assumed that the other joint owner or owners survived the decedent:

(1) If the decedent furnished the entire purchase price of the jointly held property, the value of the entire property is included in his gross estate;

(2) If the decedent furnished a part only of the purchase price, only a corresponding portion of the value of the property is so included;

(3) If the decedent furnished no part of the purchase price, no part of the value of the property is so included;

(4) If the decedent, before the acquisition of the property by himself and the other joint owner, gave the latter a sum of money or other property which thereafter became the other joint owner's entire contribution to the purchase price, then the value of the entire property is so included, notwithstanding the fact that the other property may have appreciated in value due to market conditions between the time of the gift and the time of the acquisition of the jointly held property;

(5) If the decedent, before the acquisition of the property by himself and the other joint owner, transferred to the latter for less than an adequate and full consideration in money or money's worth other income-producing property, the income from which belonged to and became the other joint owner's entire contribution to the purchase price, then the value of the jointly held property less that portion attributable to the income which the other joint owner did furnish is included in the decedent's gross estate;

(6) If the property originally belonged to the other joint owner and the decedent purchased his interest from the other joint owner, only that portion of the value of the property attributable to the consideration paid by the decedent is included;

(7) If the decedent and his spouse acquired the property by will or gift as tenants by the entirety, one-half of the value of the property is included in the decedent's gross estate; and

(8) If the decedent and his two brothers acquired the property by will or gift as joint tenants, one-third of the value of the property is so included.

Notes of Decisions

Cited in 21 cases (1 in the last 5 years), 1966–2021 · leading case: Est. of Young v. Comm'r, 110 T.C. 297 (Tax Ct. 1998).

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Est. of Young v. Comm'r, 110 T.C. 297 (Tax Ct. 1998). · cites it 8× “2040(a) ; *45 sec. 20.2040-1(a) , Estate Tax Regs.”

Est. of Goldsborough v. Comm'r, 70 T.C. 1077 (Tax Ct. 1978). · cites it 6× “In one situation, the surviving joint tenant receives property gratuitously from the decedent; the property thereafter appreciates, and the property itself is contributed in an exchange for jointly held property.”

Peters v. Comm'r, 46 T.C. 407 (Tax Ct. 1966). · cites it 10× “2040-1 , Estate Tax Regs., 3 both of which we have set out in the margin.”

Est. of Silvester v. Comm'r, 36 T.C.M. 1815 (Tax Ct. 1977). · cites it 8× “If part of the value of the property is shown to be attributable to consideration furnished by the survivor, the amount to be excluded from the gross estate is that portion of the entire date-of-death value of the property which the consideration furnished by the survivor bears…”

Rivero v. Fidlty Investments, 1 F.4th 340 (5th Cir. 2021). “” 26 C.F.R. §20.2040-1 (c)(3). Rivero contends that because Medrano neither furnished any part of the purchase price of the PepsiCo stock nor contributed any property to the Account, no part of the value of the Account is part of Medrano’s estate.”

Baillie v. Raoul, 2019 IL App (4th) 180655 (Ill. App. Ct. 2019). “See 26 C.F.R. § 20.2040-1 (b) (2015) (“The section has no application to property held by the decedent and any other person (or persons) as tenants in common.”

Drazen v. Comm'r, 48 T.C. 1 (Tax Ct. 1967). · cites it 6× “2 *132 In Schedule E of the estate tax return it was claimed that only one-half of the jointly owned property of $ 32,262.”

Est. of Edna v. T. Peters, Deceased, T. Graham Peters v. Comm'r of Internal Revenue, 386 F.2d 404 (4th Cir. 1967). “” 26 C.F.R. § 20.2040-1 (emphasis supplied) 3 .”

Est. of Fratini v. Comm'r, 1998 T.C. Memo. 308 (Tax Ct. 1998). · cites it 10× “Friedeberg contributed consideration in the form of "money" to the value of the assets in decedent's estate.”

Est. of Concordia v. Comm'r, 2002 T.C. Memo. 216 (Tax Ct. 2002). · cites it 10× “d, That where such property or any part thereof, or part of the consideration with which such property was acquired, is shown to have been at any time acquired by such other person from the decedent for less than an adequate and full consideration in money or money's worth,…”

Est. of Van Tine v. Comm'r, 1998 T.C. Memo. 344 (Tax Ct. 1998). · cites it 12× “BACKGROUND A decedent's estate includes the date-of-death value of property he or she owns jointly, except for any part of the value that the estate shows is attributable to consideration provided by the surviving joint tenant.”

Est. of Ehret v. Comm'r, 35 T.C.M. 1432 (Tax Ct. 1976). · cites it 2× “Ehret made any contributions toward the acquisition of the jointly-owned property.”

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