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§ 19.2 ESTATE TAX RULESThe concept of what constitutes a foreign charitable corporation was discussedin a court opinion. 17 A charitable deduction had been claimed for a proportionalresiduary bequest to a governmentally owned Canadian hospital, as anonprofit organization operated exclusively for the purpose of providing carefor the sick and for medical educational facilities. The gift was determined toqualify for an estate tax charitable deduction under the provision that allows adeduction for bequests to charitable corporations. 18 In this case, involving a privatehospital that had been turned over to a city, the hospital was found not to bea political subdivision in the sense that it was either a political unit or an integralgovernmental instrumentality exercising sovereign powers. Rather, the courtdetermined that the hospital was a nonintegral governmental instrumentality, aclear counterpart of a private charitable corporation organized and operatedexclusively for charitable purposes.The IRS, from time to time, issues rulings concerning the qualification of acharitable contribution to a foreign corporation for the federal estate tax charitablededuction. 19 When a decedent is not a resident or citizen of the UnitedStates, the estate is subject to a tax on the transfer of the taxable estate that is situatedin the United States at the time of death. 20 There is a deduction from thevalue of the taxable estate for bequests to a corporation organized and operatedfor charitable purposes; this deduction is limited to transfers to entities createdin, and to trustees for use within, the United States. 21 This deduction may notexceed the value of the transferred property required to be included in the grossestate. 22 The statutory law on this subject is not overridden by U.S. tax conventionswith other countries. 23(b) Transfer to Foreign Government Serving Public PurposesAn estate tax charitable deduction is allowed for transfers to or for the use of theUnited States, any political subdivision thereof, or the District of Columbia, forexclusively public purposes. 24 Although a transfer to a United States governmentalsubdivision for its general or public purposes would qualify for thededuction, the same gift to a foreign government would not.In the facts of one court case, an individual died, having bequeathed hisentire estate to the Hammer School District of Vrads Parish in Denmark, “[t]o beused by said school district in any manner it may wish for the betterment of theschools or aid to the students of said district.” In determining whether a UnitedStates estate tax deduction for the gift was allowable, the court referred to thestatutory language. 25 The court specifically chose to determine whether the Danishschool district was a political subdivision of a foreign government, not17 Old Colony Trust Co. v. United States, 433 F.2d 684 (1st Cir. 1971).18 IRC § 2055(a)(2).19 See, e.g., Tech. Adv. Mem. 199925043.20IRC §§ 2101, 2103.21 IRC § 2106(a)(2)(A)(ii).22 IRC § 2106(a)(2)(D).23 See, e.g., Silver Estate v. United States, 120 T.C. 430 (2003) (concerning deductibility of charitable bequeststo Canadian charities from estate of individual who was not a resident or citizen of the United States).24 IRC § 2055(a)(1).25 IRC § 2055(a). 561