Washington Administrative Code › Title 458 - Revenue, Department of › Chapter 458-57 - State of Washington Estate and Transfer Tax Reform Act rules › Section 458-57-025 - Determining the tax liability of nonresidents

Current through Register Vol. 24-14, July 15, 2024
(1)
Introduction.
This rule
			 applies to deaths occurring on or before May 16, 2005, and discusses how
			 property of nonresident decedents is taxed if that property is located within
			 Washington at the time of death. The estate tax rules for deaths occurring on
			 or after May 17, 2005, can be found in WAC
			 458-57-105 through
			 458-57-165.
(2)
Nonresident decedents and
			 Washington's estate tax.
If any decedent has tangible personal property
			 and/or real property located in Washington state at the time of death, that
			 property is subject to Washington's estate tax.
(a)
The reciprocity exemption.
A
			 nonresident decedent's estate is exempt from Washington's estate tax if the
			 nonresident's state of domicile exempts the property of Washington residents
			 from estate, inheritance, or other death taxes normally imposed by the domicile
			 state. The nonresident decedent must have been a citizen and resident of the
			 United States at the time of death. Also, at the time of death the laws of the
			 domicile state must have made specific reference to this state, or must have
			 contained a reciprocal provision under which nonresidents of the domicile state
			 were exempted from applicable death taxes with respect to property or transfers
			 otherwise subject to the jurisdiction of that state.
In those instances where application of this provision results
				in loss of available federal credit which would otherwise be allowed for
				federal tax purposes, Washington will absorb that proportional share which is
				applicable to property within the jurisdiction of this state. Application of
				this provision will not act to increase the total tax obligation of the
				estate.
(b)
Property
			 of a nonresident's estate which is located in Washington.
A nonresident
			 decedent's estate may have either real property or tangible personal property
			 located in Washington at the time of death.
(i) All real property physically situated in
			 this state, with the exception of federal trust lands, and all interests in
			 such property, are deemed "located in" Washington. Such interests include, but
			 are not limited to:
(A) Leasehold
			 interests;
(B) Mineral
			 interests;
(C) The vendee's (but
			 not the vendor's) interest in an executory contract for the purchase of real
			 property;
(D) Trusts (beneficial
			 interest in trusts of realty); and
(E) Decedent's interest in jointly owned
			 property (e.g., tenants in common, joint with right of survivorship).
(ii) Tangible personal property of
			 a nonresident decedent shall be deemed located in Washington only if:
(A) At the time of death the property is
			 situated in Washington; and
(B) It
			 is present for a purpose other than transiting the state.
(iii) For example, consider a nonresident
			 decedent who was a construction contractor doing business as a sole proprietor.
			 The decedent was constructing a large building in Washington. At the time of
			 death, any of the decedent's equipment that was located at the job site in
			 Washington, such as tools, earthmovers, bulldozers, trucks, etc., would be
			 deemed located in Washington for estate tax purposes. Also, the decedent had
			 negotiated and signed a purchase contract for speculative property in another
			 part of Washington. For estate tax purposes, that real property should also be
			 considered a part of the decedents' estate located in Washington.
(c)
Formula to calculate
			 Washington's estate tax for nonresident decedents.
The amount of tax
			 payable to Washington for a nonresident decedent equals the amount of federal
			 credit multiplied by a fraction, the numerator of which is the value of the
			 property located in Washington, and the denominator of which is the value of
			 the decedent's gross estate. Restated: Federal Credit x (Gross Value of
			 Property in Washington/Decedent's Gross Estate)=Amount of Washington Estate Tax
			 Due. This formula uses the gross value determined for estate tax purposes of
			 any property located in Washington. No reduction will be allowed for any
			 mortgages, liens, or other encumbrances or debts associated with such property
			 except to the extent allowable in computing the gross estate for estate tax
			 purposes.