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Treasury Regulations · 26 CFR

§ 1.1014-7. Example applying rules of §§ 1.1014-4 through 1.1014-6 to case involving multiple interests.

In effect eCFR current as of October 15, 2026

Regulation text, no changes From the eCFR, current as of October 15, 2026. The eCFR is an authoritative but unofficial editorial compilation of the Code of Federal Regulations; the official text is the annual CFR on govinfo. Compare it with this section on ecfr.gov (external site) or the official annual CFR on govinfo (external site).

Regulation under 26 U.S.C. § 1014

Cite as 26 CFR § 1.1014-7

At a glance

Read from the text and its source citation. Not part of the regulation.

Status
In the current eCFR
Source
T.D. 6500, 25 FR 11402, Nov. 26, 1960; 25 FR 14021, Dec. 21, 1960; T.D. 9989, 89 FR 17606, Mar. 11, 2024, unless otherwise noted.
Issued under
26 U.S.C. § 1014
Length
856 words · about 4 min to read
Cross-references
cites 3 Code sections and 0 regulations; cited by 2
(a) On January 1, 1950, the decedent creates a trust to pay the income to A for life, remainder to B or his estate. The trust instrument provides that if the decedent should survive A, the income shall be paid to the decedent for life. The decedent, who died on January 1, 1955, predeceases A, so that, due to the operation of the estate tax, only the present value of the remainder interest is included in the decedent's gross estate. The trust consists of an apartment building with a basis of $30,000 at the time of transfer. Under the trust instrument the trustee is required to maintain a reserve for depreciation. During the decedent's lifetime depreciation is allowed in the amount of $800 annually. At the time of the decedent's death the value of the apartment building is $45,000. A, the life tenant, is 43 years of age at the time of the decedent's death. Immediately after the decedent's death, the uniform basis of the entire property under section 1014(a) is $32,027; A's basis for the life interest is $15,553; and B's basis for the remainder interest is $16,474, computed as follows:
Step 1. Uniform basis (adjusted) immediately prior to decedent's death:
Basis at time of transfer$30,000
less
Depreciation allowed under section 1016 before decedent's death ($800 × 5)4,000
26,000
Step 2. Value of property included in decedent's gross estate:
0.40180 (remainder factor, age 43) × $45,000 (value of entire property)$18,081
Step 3. Uniform basis of property under section 1014(a), before reduction required by section 1014(b)(9):
Uniform basis (adjusted) prior to decedent's death26,000
Increase in uniform basis (determined by the following formula)7,634
Increase in uniform basis (to be determined) $19,000 (total appreciation, $45,000−$26,000)]=
$18,081 (value of property included in gross estate) $45,000 (value of entire property)]
33,634
Step 4. Uniform basis reduced as required by section 1014(b)(9) for deductions allowed prior to death:
Uniform basis before reduction$33,634
less
Deductions allowed prior to decedent's death—taken into account under section 1014(b)(9) (determined by the following formula)1,607
Prior deductions taken into account (to be determined) $4,000 (total deductions allowed prior to decedent's death)]=
$18,081 (value of property included in gross estate) $45,000 (value of entire property)
32,027
Step 5. A's basis for the life interest at the time of the decedent's death, determined under section 1015: 0.59820 (life factor, age 43) × $26,00015,553
Step 6. B's basis for the remainder interest, determined under section 1014(a): Basis prior to the decedent's death:
0.40180 (remainder factor, age 43) × $26,00010,447
plus
Increase in uniform basis owing to decedent's death:
Increase in uniform basis$7,634
plus
Reduction required by section 1014(b)(9)1,607
6,027
16,474
(b) Assume the same facts as in paragraph (a) of this section. Assume further, that following the decedent's death depreciation is allowed in the amount of $1,000 annually. As of January 1, 1964, when A's age is 52, the adjusted uniform basis of the entire property is $23,027; A's basis for the life interest is $9,323; and B's basis for the remainder interest is $13,704, computed as follows:
Step 7. Uniform basis (adjusted) as of January 1, 1964:
Uniform basis determined under section 1014(a), reduced as required by section 1014(b)(9)$32,027
less
Depreciation allowed since decedent's death ($1,000 × 9)9,000
23,027
Step 8. Allocable share of adjustment for depreciation allowable in the nine years since the decedent's death:
A's interest
0.49587 (life factor, age 52) × $7,200 ($800, depreciation attributable to uniform basis before increase under section 1014(a), × 9)3,570
B's interest
0.50413 (remainder factor, age 52) × $7,200 ($800, depreciation attributable to uniform basis before increase under section 1014(a), × 9)3,630
plus
$200 (annual depreciation attributable to increase in uniform basis under section 1014(a)) × 91,800
5,430
Step 9. Tentative bases of A's and B's interests as of January 1, 1964 (before adjustment for depreciation).
A's interest
0.49587 (life factor, age 52) × $26,000 (adjusted uniform basis immediately before decedent's death)12,893
B's interest
0.50413 (remainder factor, age 52) × $26,000 (adjusted uniform basis immediately before decedent's death)13,107
plus
Increase in uniform basis owing to inclusion of remainder in decedent's gross estate6,027
19,134
Step 10. Bases of A's and B's interests as of January 1, 1964.
A
Tentative basis (Step 9)12,893
less
Allocable depreciation (Step 8)3,570
9,323
B
Tentative basis (Step 9)19,134
less
Allocable depreciation (Step 8)5,430
13,704

Other regulations under § 1014

Cross-references

Computed from the citations in the text of 26 CFR.

Code sections it cites

Cited by 2 other regulations

Where it sits in 26 CFR

  1. Subchapter A Income tax
  2. Part 1 Income taxes
  3. Basis Rules of General Application

Nearby sections