Washington Administrative Code › Title 458 - Revenue, Department of › Chapter 458-57 - State of Washington Estate and Transfer Tax Reform Act rules › Section 458-57-125 - Apportionment of tax when out-of-state property is included in the gross estate of a decedent

Current through Register Vol. 24-14, July 15, 2024
(1)
Introduction.
This rule applies to deaths occurring on or after
			 May 17, 2005, and discusses how to apportion the estate tax when there is
			 out-of-state property included in the gross estate. The estate tax rule on
			 apportionment of estate tax for deaths occurring on or before May 16, 2005, can
			 be found in WAC
			 458-57-025.
(2)
Calculation of apportioned
			 tax.
Apportionment of the tax is allowed for estate property located
			 outside of Washington, even if the other state where the out-of-state property
			 is located does not impose an estate tax. The amount of tax is determined by
			 multiplying the preapportioned tax using Table W by a fraction. The numerator
			 of the fraction is the value of the property included in the decedent's gross
			 estate that is located in Washington. The denominator of the fraction is the
			 value of the decedent's gross estate. Intangible property is located in
			 Washington if the decedent was a resident of this state at death. Property
			 qualifying for the farm deduction is excluded from the numerator and
			 denominator of the fraction. See WAC
			 458-57-155, Farm deduction, for
			 additional information.
(a)
Example -
			 Washington resident decedent
. A widow dies during 2014 leaving a gross
			 estate of $4.1 million. The decedent was a Washington resident at death.
			 Decedent's primary residence is located in Seattle, Washington. The decedent
			 also owned a second home in Arizona valued at $300,000 and unimproved real
			 property in South Dakota valued at $750,000. The estate had $100,000 in
			 expenses deductible for federal estate tax purposes. The applicable exclusion
			 amount for 2014 after adjustment for inflation is $2,012,000.
Under the facts of this example the estate owes Washington
				estate tax on a Washington taxable estate of $1,988,000, computed as shown
				below:
Gross estate:
$4,100,000
Less allowable deductions:
($100,000)
Less applicable exclusion amount:
($2,012,000)
Washington taxable estate:
$1,988,000
The preapportionment Washington estate tax for this estate,
				using the table provided in WAC
				458-57-115(3)(a),
				equals $238,320, computed as follows: $100,000 + ($988,000 x
				14%)=$238,320.
Because the decedent owned out-of-state property, a house in
				Arizona and unimproved real property in South Dakota that are not subject to
				Washington estate tax, the tax due to Washington is calculated by multiplying
				the amount of preapportionment tax computed above by the fraction described in
				this subsection (2). Also, because the decedent was a Washington resident at
				death, the numerator of the fraction is the value of all property included in
				the decedent's gross estate that is located in this state, including the
				decedent's intangible personal property. The denominator of the fraction is the
				value of the decedent's gross estate. Using the facts in our example, the tax
				owed to Washington equals $177,287, computed as follows: (($4,100,000 -
				$1,050,000)/ $4,100,000) x $238,320=$177,287.
(b)
Example Nonresident
			 decedent.
A widow dies during 2013 leaving a gross estate of $6 million.
			 The decedent was a Colorado resident at death and all of the decedent's
			 property is located in that state, except for a vacation home located in
			 Washington valued at $650,000. The estate had $100,000 in expenses deductible
			 for federal estate tax purposes. The applicable exclusion amount for 2013 is
			 $2,000,000.
Under the facts of this example, the estate owes Washington
				estate tax on a Washington taxable estate of $3,900,000, computed as shown
				below:
Gross estate:
$6,000,000
Less allowable deductions:
($100,000)
Less applicable exclusion amount:
($2,000,000)
Washington taxable estate:
$3,900,000
The preapportionment Washington estate tax for this estate,
				using the table provided in WAC
				458-57-115(3)(a),
				equals $534,000, computed as follows: $390,000 + ($900,000 x
				16%)=$534,000.
Because the decedent owned property located outside Washington,
				the tax due to Washington is calculated by multiplying the amount of
				preapportionment tax computed above by the fraction described in this
				subsection (2). Also, because the decedent was not a Washington resident at
				death, the numerator of the fraction does not include the value of decedent's
				intangible personal property. The denominator of the fraction is the value of
				the decedent's gross estate. Using the facts in this example, the tax owed to
				Washington equals $57,850, computed as follows: ($650,000/$6,000,000) x
				$534,000=$57,850.