California Code of Regulations › Title 18 - Public Revenues › Division 2.5 - State Controller › Chapter 1 - Inheritance Tax › Article 2 - Imposition and Computation of Inheritance Tax › Section 13403 - Application of Exemptions or Exclusion

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
(a) Specific Exemptions. The specific
				  exemptions provided in Revenue and Taxation Code Sections
				  13801
				  to
				  13803,
				  inclusive, come out of the lower rate brackets and the excess over the
				  exemptions is taxed in the rate bracket or brackets where it would have been
				  taxed had the exemption not been allowed (see Revenue and Taxation Code Section
				  13403).
				  Consequently, if a parent dying in 1974 left a taxable estate of $50,000
				  distributed to a minor child, the $12,000 specific exemption then provided
				  under Revenue and Taxation Code Section
				  13801
				  is applied to the first rate bracket leaving $13,000 taxable at the first rate
				  bracket (3 percent), and $25,000 taxable at the second rate bracket (4
				  percent). Likewise if a parent dying in 1981 leaves a taxable estate of $50,000
				  passing to a minor child the $40,000 specific exemption provided by Section
				  13801, amended and effective as to
				  decedents dying on and after January 1, 1981, is applied to the first rate
				  bracket as to $25,000 and to $15,000 in the second rate bracket leaving $10,000
				  taxable at the second rate bracket (4 percent).
(b) Separate Property Exemption or Exclusion
				  Between Spouses.
(1) Decedents Dying on or
				  After January 1, 1976 and Prior to January 1, 1981. The marital exclusion of
				  separate property provided by Revenue and Taxation Code Section
				  13805,
				  as amended and made effective as to decedents dying on or after January 1,
				  1976, and prior to January 1, 1981, is excluded from the clear market value of
				  the estate before applying any of the tax bracket rates. Consequently, if a
				  spouse dies in 1976 with a separate property estate of $150,000 passing to the
				  surviving spouse, $75,000 (one-half of the separate property then provided
				  under Revenue and Taxation Code Section
				  13805)
				  is excluded. The balance of $75,000 is subject to the $60,000 specific
				  exemption then provided under Revenue and Taxation Code Section
				  13801
				  to be taken out of the first three rate brackets leaving $15,000 taxable at the
				  third rate bracket (6 percent).
(2)
				  Decedents Dying Prior to January 1, 1976. The marital exemption under Revenue
				  and Taxation Code Section
				  13805,
				  applying with reference to separate property of a deceased spouse dying prior
				  to January 1, 1976, comes out of the lower tax rate brackets. The excess over
				  this and the specific exemption under Revenue and Taxation Code Section
				  13801
				  is taxed in the rate bracket or brackets where it would have been taxed had the
				  exemption not been allowed. Consequently if a spouse dies in 1974 with a
				  separate property estate having a clear market value of $150,000 passing to the
				  surviving spouse, the $5,000 specific exemption (Revenue and Taxation Code
				  Section
				  13801
				  prior to January 1, 1976) and the $75,000 marital exemption (Section
				  13805 prior to January 1, 1976)
				  are applied to the first and second rate brackets as to the first $50,000 of
				  the total exemptions allowable. The balance of the allowable exemptions
				  ($30,000) is applied to the third rate bracket leaving $20,000 taxable in the
				  third rate bracket and $50,000 taxable in the fourth rate
				  bracket.