Iowa Administrative Code › Agency 701 - Revenue Department › Title I - Administration › Chapter 86 - Inheritance Tax › Rule 701-86.2 - Inheritance Tax Returns and Payment of Tax

Current through Register Vol. 47, No. 3, July 24, 2024
(1)
Filing of an inheritance tax
				return.
Estates meeting certain requirements must file an inheritance
				tax return, and it is the duty of certain persons associated with the estate to
				file the inheritance tax return as follows:
a.
Mandatory filing.
The
				inheritance tax return provided for in subrule 86.2(2) must be filed if the
				gross share of any heir, beneficiary, transferee, or surviving joint tenant
				exceeds the exemptions allowable in Iowa Code sections
				4504. and
				4509.. In
				addition, if Iowa real estate is includable in the gross estate, the return
				must be filed, even if no tax is due, prior to the issuance of a no tax due
				certificate.
Effective July 1, 2001, an estate is required to file an Iowa
				  inheritance tax return if the entire estate of the decedent exceeds the sum of
				  $25,000 after deducting the liabilities of the estate.
b.
Who must file.
If the
				decedent's estate is probated as provided in Iowa Code chapter 633 or
				administered as provided in Iowa Code section
				45022.,
				the personal representative of the estate is charged with the duty of filing
				the return with the department. If the personal representative of the estate
				fails to file the return or if the estate is not probated, it shall be the duty
				of those heirs, beneficiaries, transferees, surviving joint tenants, and
				trustees who receive shares in excess of the allowable exemptions or shares
				which are taxable in whole or in part, without the deduction of liabilities,
				and those individuals in receipt of the decedent's property are either jointly
				or severally to file the return with the department.
c.
Who is not required to file a
				return for estates of decedents dying on or after July 1, 2004.
(1) Effective for estates with decedents
				dying on or after July 1, 2004, if an estate has no Iowa inheritance tax due
				and there is no obligation for the estate to file a federal estate tax return,
				even though real estate is involved, an Iowa inheritance tax return need not be
				filed if at least one of the following situations is applicable:
1. All estate assets are held solely in joint
				tenancy with right of survivorship between husband and wife alone; or
2. All estate assets are held solely in joint
				tenancy with right of survivorship, and not as tenants in common, solely
				between the decedent and individuals listed in Iowa Code section
				4509. who
				are statutorily exempt from Iowa inheritance tax on shares received from a
				decedent based on the individuals' relationship to the decedent. This numbered
				paragraph does not apply to a jointly held interest in an asset that passes to
				both an individual listed in Iowa Code section
				4509. and
				any other individual not listed in Iowa Code section
				4509.,
				including that individual's spouse. See subparagraph
				86.2(1)
"c"
(2) for a list of individuals who are statutorily
				exempt from Iowa inheritance tax pursuant to Iowa Code section
				4509.;
				or
3. All assets are passing by
				beneficiary designation pursuant to a trust and are intended to pass the
				decedent's property at death or through a nonprobate transfer solely to
				individuals listed in Iowa Code section
				4509. who
				are statutorily exempt from Iowa inheritance tax on shares received from a
				decedent based on their relationship to the decedent. This numbered paragraph
				does not apply to a jointly held interest in an asset that passes to both an
				individual listed in Iowa Code section
				4509. and
				any other individual not listed in Iowa Code section
				4509.,
				including that individual's spouse. See subparagraph
				86.2(1)
"c"
(2) for a list of individuals who are statutorily
				exempt from Iowa inheritance tax pursuant to Iowa Code section
				4509.;
				or
4. All estate assets are passed
				by will or intestate succession as set forth in Iowa Code chapter 633, division
				IV, and beginning with section
				633210., solely
				to individuals who are statutorily exempt from Iowa inheritance tax as set
				forth below in subparagraph 86.2(1)
"c"
(2); or
5. For estates of decedents dying on or after
				July 1, 2007, if the total aggregate value of all the tangible personal
				property in the estate is $5,000 or less and in-kind distributions are made.
				Any in-kind distribution of personal property is exempt from inheritance tax
				when the total aggregate value of the tangible personal property in the estate
				is $5,000 or less. If the total aggregate amount of tangible personal property
				is greater than $5,000, then the exemption for in-kind distributions of
				tangible personal property does not apply. See Iowa Code section
				4504(7).; see also
				Iowa Code section
				633276.
				for a description of tangible personal property that qualifies.
EXAMPLE 1: The total aggregate value of the tangible personal
				  property in the estate is $3,000. The executor makes an in-kind distribution of
				  a diamond ring worth $1,000 to a neighbor. The diamond ring is not subject to
				  inheritance tax.
EXAMPLE 2: The total aggregate value of the tangible personal
				  property in the estate is $15,000. The executor makes an in-kind distribution
				  of a diamond ring worth $1,000 to a neighbor. The diamond ring is subject to
				  inheritance tax because the total aggregate value of tangible personal property
				  is greater than $5,000.
(2) Individuals listed in Iowa Code section
				4509. who
				are statutorily exempt from Iowa inheritance tax.
1. For estates of decedents dying prior to
				July 1, 2016, the entire amount of property, interest in property, and income
				passing solely to the surviving spouse, and parents, grandparents,
				great-grandparents, and other lineal ascendants, children including legally
				adopted children and biological children entitled to inherit under the laws of
				this state, stepchildren, and grandchildren, great-grandchildren, and other
				lineal descendants are exempt from Iowa inheritance tax.
2. For estates of decedents dying on or after
				July 1, 2016, the entire amount of property, interest in property, and income
				passing solely to the surviving spouse, lineal ascendants, lineal descendents,
				and stepchildren and their lineal descendants are exempt from Iowa inheritance
				tax. "Lineal descendants" includes descendants by adoption.
d.
General
				rules.
An Iowa inheritance tax return must be filed if estate assets
				pass to both an individual listed in Iowa Code section
				4509. and
				that individual's spouse.
(1) If an
				inheritance tax return is not required because the estate meets the criteria in
				paragraph 86.2(1)
"c,"
the final report (beginning with Iowa
				Code section
				633469.)
				need not contain an inheritance tax receipt (clearance) issued by the
				department, but must properly certify that one of the criteria set forth in
				paragraph 86.2(1)
"c"
has been met as set forth in Iowa Code
				section
				45058(2)..
(2) If any interest in real estate passes on
				account of the decedent's death and no Iowa inheritance tax return is required
				to be filed and the real estate does not pass through probate administration,
				then one of the persons succeeding to the interest in the real property must
				file an affidavit in the county in which the real property is located setting
				forth the legal description of the real property and the fact that an Iowa
				inheritance tax return is not required to be filed with the department. A copy
				of this affidavit must be retained by the beneficiary that holds the real
				estate.
(3) If a return is filed
				with the department and the return is not required to be filed, the department
				will retain the return as required by statutes governing retention of returns.
				However, the department will not process the filed return if the statute does
				not require that the return be filed. The department will not issue a clearance
				in an estate in which a return is not required to be filed.