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 13408.1 - Independent Transfer and Power of Appointment to Same Person

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
(a) Transfers on or
				  After June 25, 1935. Should any person on or after June 25, 1935 (the effective
				  date of the Inheritance Tax Act of 1935), receive both a power of appointment
				  subject to the Inheritance Tax Law (see Revenue and Taxation Code Sections
				  13691
				  through
				  13698),
				  over particular property and an outright bequest or devise of other property
				  from the same transferor, the computation of the tax is governed by the
				  following:
(1) General Power of Appointment.
If the power is general in nature, or if it is limited in
					 nature but the donee may use or otherwise receive benefit from the property
					 subject to the power, the value of the property subject to the power is
					 aggregated with the value of the property bequeathed or devised, and the tax is
					 computed as though there had been a single transfer to the recipient, the rates
					 applicable being those in effect at the date of the transferor's
					 death.
(2) Limited Power of
				  Appointment.
If the power is limited in nature, and the donee cannot use
					 or receive benefit from the property subject to the power, the value of the
					 property subject to the power is not united with the value of the property
					 included in the outright gift for the purpose of tax computation, as in the
					 case of a general power. On the contrary, each item is treated individually for
					 the purpose of tax computation. The specific exemption allowable is governed by
					 Section 13801.3(a)(2);
					 the dates applicable are those in effect at the transferor's death. The
					 provisions of this paragraph may be illustrated by the following
					 examples:
EXAMPLE (1). A at his death in 1970 by will gives B, his
					 adult son, property valued at $50,000; and by the same instrument gives B a
					 limited power of appointment over a remainder in other property, such remainder
					 also being valued at $50,000. B cannot use or otherwise benefit from the
					 property subject to the power. The tax is computed as follows:
Tax
Value of outright
							 gift..........................
$50,000
5,000 exempt
20,000 at
							 3%..........................
$ 600
25,000 at
							 4%..........................
1,000
$1,600
Value of property subject to
							 power..........................
$50,000
25,000 at
							 3%..........................
$ 750
25,00 at
							 4%..........................
1,000
1,750
$3,350
EXAMPLE (2). The facts are the same as in the example
					 immediately preceding, except that the value of the outright gift is $2,000.
					 The tax is computed as follows:
Tax
Value of outright
							 gift..........................
$2,000
2,000 exempt
Value of property subject to
							 power..........................
$50,000
3,000 exempt
22,000 at
							 3%..........................
$ 660
25,000 at
							 4%..........................
1,000
$1,660