Ó£»¨ÊÓƵ

Estate Tax - Important Technical Provisions

P.L. 2016, c. 57 signed into law on October 14, 2016, provides that the Ó£»¨ÊÓƵ Estate Tax exemption increased from $675,000 to $2 million for the estates of resident decedents who die on or after January 1, 2017, but before January 1, 2018. (There is no Estate Tax assessed against nonresident decedent's estates.)

For the estates of resident decedents who die on or after January 1, 2018, the Ó£»¨ÊÓƵ Estate Tax will not be imposed.

In addition to the Estate Tax, Ó£»¨ÊÓƵ imposes an Inheritance Tax on the estates of certain resident and nonresident decedents. P.L. 2016, c. 57 made no changes to the Ó£»¨ÊÓƵ Inheritance Tax.

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For the estates of resident decedents who die on or after January 1, 2017, but before January 1, 2018

For the estates of resident decedents who die on or after January 1, 2017, but before January 1, 2018, the Ó£»¨ÊÓƵ Estate Tax no longer conforms to the provisions of the federal Internal Revenue Code in effect on December 31, 2001 and instead follows the federal Internal Revenue Code in effect on January 1, 2017 for determining the value of the estate which will be subject to Ó£»¨ÊÓƵ Estate Tax.

• A Ó£»¨ÊÓƵ Estate Tax Return must be filed if the decedent's gross estate, as determined in accordance with the provisions of the Internal Revenue Code, exceeds $2 million. The return must be filed within nine (9) months from the decedent's date of death.
• The Ó£»¨ÊÓƵ Estate Tax is determined pursuant to section 2051 of the federal Internal Revenue Code (26 U.S.C. s.2051).
• A completed current federal Form 706 (Rev. August 2013 version) must be submitted along with the Ó£»¨ÊÓƵ Estate Tax Return whether or not the estate is subject to federal estate tax.
• The starting point for the Ó£»¨ÊÓƵ Estate Tax is the federal gross estate, which is reported on line 1 of the federal Form 706. This amount is to be reported on line 1 of the 2017 Ó£»¨ÊÓƵ Estate Tax Return. Allowable deductions reported on line 2 of the federal Form 706 are then reported on line 2 of the 2017 Ó£»¨ÊÓƵ Estate Tax Return.
• The Ó£»¨ÊÓƵ taxable estate is calculated by subtracting the allowable deductions from the gross estate.
• The Ó£»¨ÊÓƵ tentative tax is calculated using the 2017 Ó£»¨ÊÓƵ Estate Tax Online Calculator .
• Total allowable Ó£»¨ÊÓƵ credits are deducted from the Ó£»¨ÊÓƵ tentative tax to arrive at the Net Ó£»¨ÊÓƵ Estate Tax. There are three possible Ó£»¨ÊÓƵ Estate Tax credits.
  1. Credit for the tax on $2 million exclusion ($99,600). This represents the amount of tax that would have been due on a $2 million estate, but is excluded for 2017. The Estate Tax Online Calculator deducts this credit automatically.
  2. Credit for Ó£»¨ÊÓƵ Inheritance Tax paid. This is the tax amount, if any, imposed by the Ó£»¨ÊÓƵ Inheritance Tax. (Do not include interest or penalty.)
  3. Credit for the portion of tax attributable to real and tangible property located outside of Ó£»¨ÊÓƵ, line 4 of Schedule E-3.
  The Ó£»¨ÊÓƵ Estate Tax is reduced by the portion of the tax that is attributable to real and tangible property located outside Ó£»¨ÊÓƵ. The amount of the reduction is calculated by multiplying the tax due on the entire gross estate wherever located by a fraction. The numerator of the fraction is the gross value of property located outside of the state, and the denominator is the Ó£»¨ÊÓƵ entire gross estate wherever located. In general, for purposes of the calculation, intangible personal property is considered to be located in Ó£»¨ÊÓƵ regardless of where it may actually be located.

Gross Value of Property Located Outside Ó£»¨ÊÓƵ	x Tax Due on Entire Gross Estate Wherever Located = Allowable Reduction
Ó£»¨ÊÓƵ Entire Gross Estate Wherever Located

For additional information regarding the changes to the Ó£»¨ÊÓƵ Estate Tax, please see Estate Tax Filing Requirements.