FEDERAL ESTATE TAX CREDIT RELATING TO STATE INHERITANCE AND ESTATE TAXES Under the Federal Revenue Act of 1926, taxpayers are credited with the amount of any estate, legacy, or succession taxes actually paid to any State or Territory or the District of Columbia, in respect of any property included in the gross estate (not including any such taxes paid with respect to the estate of a person other than the decedent). This credit is not to exceed 80 percent of the tax computed in accordance with the 1926 rates. It should be borne in mind that these 1926 rates are used for computing such credit only; there have been substantial increases in rates since 1926, and Federal estate taxes are no longer based on these rates. Wherever reference is made in any State law to the credit allowed under the Federal Revenue Act of 1926, or to the rates imposed by said act, reference is being made to the credit herein mentioned, and to the rates imposed under the following schedule: (410, 413) Not over $50,000__ 1 2 3 8 9 10 11 12 13 14 15 16 17 18 19 20 In addition to the amounts which may be deducted from the value of the gross estate for funeral and administration expenses, claims against the estate, indebtedness, taxes, and for the support during the settlement of the estate of those dependent upon the decedent, each citizen or resident is also allowed a personal exemption of $40,000. (412, 535c) Title 26 of 1934 U. S. Code, and Supplement III. (7) ALABAMA ESTATE TAX Tax imposed.-There is levied upon all net estates passing by will, devise, or under the intestate laws of this State, or otherwise, a tax equal to the full amount of the State tax permissible when levied by and paid to the State as a credit or deduction in computing any Federal estate tax payable by such estate according to the act of Congress in effect, on the date of the death of the decedent, taxing such estate, with respect to the items subject to taxation in Alabama. This tax is not to exceed in the aggregate amounts allowed to be credited against or deducted from such Federal estate tax.2 Real estate and tangible personal property within the jurisdiction of this State, except as otherwise provided, belonging to nonresidents and which pass by deed, grant, bargain, sale, or gift made in contemplation of death, or made or intended to take effect in possession or enjoyment at or after the death of the grantor or donor, are subject to the same tax as is imposed upon transfers of residents. (359.1, 359.7) Rates of tax. The rates of taxation and the definition of "net estate" and the methods of arriving at the same are as provided in the Federal revenue act of 1926. (359.1) Filing returns.-Each executor, administrator, or other personal representative is required to file with the State tax commission within 30 days a duplicate of all the returns he is required to make to the Federal authorities. (359.3) Payment of tax; interest.-This tax is due and payable to the State tax commission within 1 year of decedent's death, although the commission may extend the time for payment of all or any part to not exceeding 5 years from the original due date. Interest on extended payments is charged at the legal rate. Taxes imposed in relation to estates of nonresident decedents are due and payable at the death of the decedent; if not paid within 1 year thereafter, unless the time for payment is extended, interest is charged at the rate of 12 percent per annum from the expiration of 1 year after death, and said taxes remain a lien on the property transferred until paid. (359.4, 359.7) Tax lien.-The State has a lien for all taxes and interest thereon becoming due under these provisions on all property which a decedent dies seized or possessed of subject to the taxes imposed hereunder, in whatever form of investment it may happen to be, and all property acquired in substitution thereof. (359.12) Disposition of proceeds. The proceeds of this tax, after deducting administration expenses, are paid into the State general fund. (359.11) Administration of act.-The administration of these provisions is exercised by the State tax commission. (359.17) Source of information.-Article XII, Chapter 2, Revenue Bill of 1935. The provisions of law relating to this tax are shown on p. 7. ARIZONA ESTATE TAX Tax imposed. Under the Estate Tax Act of 1937, a tax is imposed upon the net estate of every decedent, whether a resident or nonresident of this State. (3) Valuation of "gross estate."-The valuation of the "gross estate" of a decedent is determined by including the value at the time of his death of all property, real or personal, tangible or intangible, wherever situated: 1. To the extent of his interest therein at the time of his death. 2. To the extent of any interest therein of which the decedent has at any time made a transfer, by trust or otherwise, in contemplation of or intended to take effect in possession or enjoyment at or after his death, or of which he has at any time made such a transfer, under which he has retained for his life or for any period not ascertainable without reference to his death, or for any period which does not end before his death (a) the possession or enjoyment of, or the right to the income from, the property, or (b) the right, to designate the person who shall possess or enjoy the property or the income therefrom, except in case of a bona fide sale for an adequate and full consideration in money or money's worth. 3. To the extent of any interest therein of which the decedent has at any time made a transfer where the enjoyment thereof was subject at the date of his death to any change through the exercise of a power to alter, amend, or revoke, or where the decedent relinquished any such power in contemplation of his death, except in case of a bona fide sale for an adequate and full consideration in money or money's worth. 4. To the extent of the interest therein held as joint tenants by the decedent and any other person, or deposited with any person carrying on a banking business in their joint names and payable to either or the survivor, except such part thereof as may be shown to have originally belonged to such other person and never to have been received or acquired by the latter from the decedent for less than an adequate or full consideration in money or money's worth. 5. To the extent of any property passing under a general power of appointment exercised by the decedent by will, or by deed executed in contemplation of or intended to take effect in possession or enjoyment at or after his death, or by deed under which he has retained for his life or any period not ascertainable without reference to his death, or for any period which does not end before his death, the possession or enjoyment of, or the right to the income from, the property, or the right to designate the persons who shall possess or enjoy the property or the income therefrom, except in case of a bona fide sale for an adequate and full consideration in money or money's worth. 6. To the extent of the amount receivable by the executor as insurance on the policies taken out by the decedent upon his own life, and to the extent of the excess of $50,000 of the amount receivable by all other beneficiaries on insurance under policies taken out by the decedent upon his own life. (5) "Net estate" of residents.-The valuation of the "net estate" of a resident is determined by deducting from the value of the gross estate: (a) Amounts for funeral and administration expenses; claims against the estate, including unpaid mortgages upon, or any indebtedness in respect thereto (except in the case of a resident decedent, where such property is not situated in the State); property to the extent that such claims, mortgages, or indebtedness were incurred or contracted bona fide and for an adequate and full consideration in money or money's worth. (b) Losses incurred during the settlement of the estate when not compensated for by insurance or otherwise. (c) Reasonable amounts expended for support during settlement of the estate of decedent's dependents, but not including income taxes upon income received after the death of the decedent or any estate, succession, or legacy taxes. (d) From the value of the net estate as thus determined, to the extent included in the gross estate, of life-insurance policies payable to and received by the estate tax commissioner in trust for the payment of estate, inheritance, and similar taxes levied by the State against or with respect to the estate of the decedent, exclusive of any excess over the amount of such taxes, which excess must be accounted for, without interest, to decedent's executor for the benefit of the persons entitled thereto. (6) Net estate of nonresidents.-The value of the net estate of a nonresident is determined by deducting from the value of that part of his gross estate situated in this State, at the time of his death, that proportion of the deduction specified in the preceding paragraph, which the value of such part bears to the value of his entire gross estate, wherever situated. (6) Exemptions. In the case of a resident, there is exempt from this tax property transferred (a) to municipal corporations within the State for public purposes; (b) or to domestic corporations for religious, charitable, or educational purposes, and to be used within this State; (c) and property of the value of not more than $25,000. Exemptions for nonresidents are the same as for residents, except that under (b) the exemption is limited to the value of the property required to be included in the gross estate in this State, while under (c) the exemption is limited to property within this State. (6) Rates of tax. The rates of tax imposed on the amounts transferred, in excess of the exemptions, are as follows: (4) RATE OF VALUE OF NET ESTATE TRANSFERRED On the first $25,000. Filing returns.-Every executor or administrator is required to file with the estate tax commissioner, within 6 months after decedent's death, a sworn return setting forth the data necessary to establish the correct tax. Returns are required in all cases where the gross estate at the death of the decedent exceeded $25,000, and in the case of the estate of every nonresident any part of whose gross estate is situated in this State. (15) Payment of tax; interest; discount. This tax is payable to the estate tax commissioner and is due at the death of the decedent; if paid within 6 months from date thereof, a discount of 5 percent is allowed; if not paid within 1 year thereof, interest is charged at the rate of 8 percent per annum, and is computed from the expiration of 1 year from date of death; and if not paid within 2 years, 10 percent per annum is charged until paid. The time for payment of the tax may be extended by the commissioner for good showing and upon an order of the court. (11) Tax lien. Every tax imposed under this act remains a lien upon the property, real, personal, and mixed, of a decedent until paid. (26) Disposition of proceeds. The proceeds of this tax, less the collection expenses and deductions allowed, are transferred monthly to the State general fund. (23) Administration of act.-The State treasurer is the State estate tax commissioner, and administers and enforces the provisions of this act. (34) Source of information.-Chapter 27 of the Session Laws of 1937. |