West Virginia Code of State Rules › Agency 110 - Tax › Title 110 - LEGISLATIVE RULE STATE TAX DEPARTMENT › Series 110-11 - Inheritance And Transfer Tax › Section 110-11-2 - Deduction of Federal Estate Tax

Current through Register Vol. XLI, No. 28, July 12, 2024
2.1. General. With the respect to decedents
				dying on or after March 6, 1959, where a decedent dies a resident of West
				Virginia, a deduction is allowed for Federal estate tax paid in determining the
				inheritance tax. The amount of the deduction is the Federal estate tax paid, to
				the extent that, by reason of applicable State or Federal law, the estate tax
				is properly payable by, and the ultimate legal incidence of the estate tax is
				upon, the decedent's probate estate or upon the recipient or holder of other
				property subject to inheritance tax. In the absence of any direction to the
				contrary in the decedent's will or other written instrument, where, under
				applicable state or federal law the executor or administrator of the decedent's
				estate or any other person is entitled to reimbursement from any person
				receiving or holding property passing by reason of the decedent's death for
				Federal estate tax paid with respect to such property, no deduction is allowed
				to the extent of such reimbursement unless the amount with respect to which
				such right of reimbursement exists is uncollectible and such right is therefore
				ineffective. The Commissioner will consider any such right of reimbursement
				effective unless the executor, administrator or other person having such right
				furnishes the Commissioner with satisfactory evidence of the uncollectibility
				of all or part of the amount to which such right of reimbursement
				exists.
2.2. Where all property
				subject to Federal estate tax is also subject to inheritance tax. Where all
				property subject to Federal estate tax is also subject to the inheritance tax,
				the full amount of the estate tax is allowed as a deduction for inheritance tax
				purposes.
Example 1. Decedent died intestate April 1, 1959. The value
				  of all property included in his estate for both Federal estate tax and
				  inheritance tax purposes was one hundred thousand dollars ($100,000). An estate
				  tax of two thousand dollars ($2,000) was paid by his administrator. The two
				  thousand dollars ($2,000) is deductible for the inheritance tax
				  purposes.
Example 2. Decedent died testate April 1, 1959. His will,
				  after making several specific bequests, directed his executor to pay out of his
				  residuary estate all State and Federal taxes imposed by reason of his death.
				  All property subject to Federal estate tax was also subject to inheritance tax.
				  The executor paid an estate tax in the amount of twelve thousand dollars
				  ($12,000). The twelve thousand dollars ($12,000) is deductible for inheritance
				  tax purposes.
2.3. Where
				part of the property subject to Federal estate tax is not subject to
				inheritance tax.
(a) General. Federal estate
				tax paid is allowed as a deduction in determining the inheritance tax except
				where the person paying the estate tax has an effective right of reimbursement
				(whether exercised or not) pursuant to State or Federal law or under the
				decedent's will. The amount of the deduction for Federal estate tax depends in
				each case, upon the ultimate legal incidence of the estate tax. No deduction is
				allowed for that portion of Federal estate tax paid with respect to property
				which is not subject of inheritance tax where the person paying such portion of
				estate tax has an effective right of reimbursement therefor (whether exercised
				or not). However, the deduction is allowed to the extent that the person paying
				such portion of estate tax cannot recover the amount to which he would
				otherwise be entitled by reason of such right of reimbursement.
(b) Where decedent dies intestate or where
				there is no direction by will or otherwise respecting payment of federal estate
				tax. Where the decedent dies intestate or where the will or other written
				instrument contains no direction with respect to the payment of Federal estate
				tax, the portion of estate tax which is attributable to property not subject to
				inheritance tax is deductible to the extent that the person paying the estate
				tax cannot recover the amount thereof from the person receiving or holding such
				property. The following examples illustrate this provision:
Example 1. The decedent died intestate April 1, 1959. Part of
				  the property subject to Federal tax is not subject to inheritance tax. The
				  administrator paid the Federal estate tax in the amount of fifteen thousand
				  dollars ($15,000). Of this amount, one thousand dollars ($1,000) was
				  attributable to property not subject to inheritance tax. The administrator
				  establishes, to the satisfaction of the Commissioner, that he cannot recover
				  such amount from the recipient or holder of the property. The entire estate
				  tax, fifteen thousand dollars ($15,000), is deductible in determining the
				  amount subject to inheritance tax.
Example 2. The facts are the same as in Example 1, except
				  that the administrator could recover the portion of estate tax which is
				  attributable to property not subject to inheritance tax. In this case the
				  deduction is limited to fourteen thousand dollars ($14,000).
(c) Where decedent dies testate and his will
				or other written instrument contains a direction for the payment of Federal
				estate tax. Where the decedent's will or other written instrument directs his
				executor or other person to pay the Federal estate tax out of property subject
				to inheritance tax, the entire amount of estate tax paid is allowed as a
				deduction for inheritance tax purposes. In computing the inheritance tax, such
				amount is first deducted from the value of such property before the applicable
				rate of tax is applied. The following examples illustrated this provisions:
Example 1. Decedent died testate April 1, 1959. The value of
				  all property included in his estate for estate tax purposes amounted one
				  hundred thousand dollars ($100,000). Only part of this property is subject to
				  inheritance tax. The decedent's will directs that Blackacre, a farm owned by
				  decedent in Marion County, West Virginia, shall be sold and the proceeds used
				  to pay the estate tax. Blackacre was sold for an amount in excess of the amount
				  of the estate tax. The entire amount of the estate tax paid is
				  deductible.
Example 2. Decedent died testate April 1, 1959. His gross
				  estate for Federal estate tax purposes consisted of life insurance proceeds
				  payable to his wife in the amount of one hundred thousand dollars ($100,000),
				  and stocks having a value of two hundred thousand dollars ($200,000). He
				  bequeathed ten thousand dollars ($10,000) to his son. The will directed the
				  executor to pay out the residuary estate all inheritance and estate taxes
				  imposed by reason of his death, and further directed that no part of any such
				  taxes so paid should be deducted from any bequest, or collected from or paid by
				  any other person (including, but not limited to, any person who is a
				  beneficiary of insurance on his life), by way of reimbursement, proration,
				  apportionment or otherwise. The balance of the residuary estate was bequeathed
				  to decedent's wife. The entire Federal estate tax paid is deductible.