2023 Laws of Puerto Rico › TITLE THIRTEEN - Taxation and Finance (§§ 1 — 33423) › Subtitle 17 - Internal Revenue Code of 2011 (§§ 30001 — 33423) › PART III - Decedent’s Estate and Gifts (§§ 31001 — 31176) › Chapter 1022 - Decedent’s Estate; Residents of Puerto Rico (§§ 31011 — 31044) › Subchapter C - Taxable Decedent’s Estate (§§ 31031 — 31038) › § 31032 - Deduction in relation to properties located in Puerto Rico

(a) The value of any property located in Puerto Rico (as defined and listed in this Section) at the time of death of a decedent shall be deductible from the gross estate of a decedent who was a Puerto Rico resident, except for the provisions set forth in § 31036 of this title.
(b) For purposes of this section, the term “property located in Puerto Rico” shall mean and include the following:
(1) Except as provided in this section, any personal and real property located in Puerto Rico that belongs to a Puerto Rico resident. As for personal property of the kinds described in clauses (2)—(10) of this subsection, the deduction shall be limited to those properties that conform to the description provided in such paragraphs.
(2) Stock issued by any foreign corporation or partnership, when not less than eighty percent (80%) of the gross income of such foreign corporation or partnership for the three (3)-year period ending at the close of its taxable year before the date of death of the decedent, or the corresponding period from the date of existence of such corporation or partnership, if such income was actually connected with the conduct of trade or business in Puerto Rico, pursuant to the provisions of §§ 30041 et seq. of this title; Provided, That if the decedent owned over ten percent (10%) of the stock (voting stock or value) in said foreign corporation or partnership, for purposes of determining whether it satisfies the requirement of having eighty percent (80%) or more of its gross income being actually connected with the conduct of trade or business in Puerto Rico for the period mentioned above, the gross income of any corporation or partnership in which such foreign corporation or partnership holds, directly or indirectly, over fifty percent (50%) of stock (voting stock or value), shall be taken into consideration, in addition to the gross income of such foreign corporation or partnership.
(3) Stock issued by any foreign corporation or partnership, when not less than eighty percent (80%) of the gross income of such foreign corporation or partnership by the three (3)-year period ending on the close of its taxable year before the time of death of the decedent, or which period may correspond from the date of existence of such corporation or partnership, if such income was truly related to the exploitation of a trade or business in Puerto Rico pursuant to the provisions of §§ 30041 et seq. of this title; Provided, That when the decedent owned over ten percent (10%) of the stock (by value or voting power) in said foreign corporation or partnership, for purposes of determining whether it meets with the requirement of having eighty percent (80%) or more of its gross income being truly related with the exploitation of a trade or business in Puerto Rico for the period mentioned above, the gross income of any corporation or partnership in which such domestic [sic] corporation or partnership holds, directly or indirectly, over fifty percent (50%) of stock (by value or voting power), shall be taken into consideration, in addition to the gross income of such foreign corporation or partnership.
(4) Bonds, notes or other debentures issued by:
(i) The Government of Puerto Rico;
(ii) municipalities located within the jurisdiction of the Government of Puerto Rico;
(iii) public authorities or corporations, both from the Government of Puerto Rico and from its municipalities, which belong to a decedent who was a Puerto Rico resident.
(5) Bonds, notes or other debentures of a Puerto Rico resident; or from a domestic corporation or partnership; or secured with real property located in Puerto Rico; or from foreign corporations or partnerships when not less than eighty percent (80%) of the gross income of such foreign corporation or partnership by the three (3)-year period ending on the close of its taxable year before the time of death of the decedent, if such income was earned from sources in Puerto Rico under the provisions of §§ 30041 et seq. of this title, which belong to a Puerto Rico resident.
(6) The amounts payable on account annuity contracts and individual retirement accounts eligible under §§ 30041 et seq. of this title.
(7) Deposits, certificates of deposit, and savings accounts with persons carrying on in the banking business in Puerto Rico, insofar as the accounting for such deposits, certificates or savings accounts is kept in branches in Puerto Rico.
(8) Deposits, certificates of deposit, and savings accounts in savings and loan associations, credit unions or similar institutions devoted to conducting business in Puerto Rico, insofar as the accounting for such deposits, certificates or savings accounts is kept in branches in Puerto Rico.
(9) Death benefits, as this term is defined in this part.
(10) Funds accrued under bonus plans in stock, pensions, profit sharing, or annuities that qualify under §§ 30041 et seq. of this title, as well as under the United States Internal Revenue Code, held by a Puerto Rico resident.
History —Jan. 31, 2011, No. 1, § 2023.02, retroactive to Jan. 1, 2011; Dec. 10, 2011, No. 232, § 125.