New Mexico Administrative Code
Title 3 - TAXATION
Chapter 8 - ESTATE TAX
Part 3 - CREDIT FOR TAX PAID TO OTHER STATE
Section 3.8.3.8 - CALCULATION OF CREDIT FOR TAX PAID OTHER STATE; EXAMPLES

Universal Citation: 3 NM Admin Code 3.8.3.8

Current through Register Vol. 35, No. 6, March 26, 2024

A. The following examples illustrate the application of Section 7-7-3 NMSA 1978. The federal credit in each case is determined by reference to federal law. All other figures are hypothetical.

B. Example 1: T is a New Mexico decedent. T's gross estate is $1,750,000; T has $140,000 in deductions. Thus the taxable estate is $1,610,000. $175,000 of T's estate is real property located in state X, where it is taxed. State X does not have a reciprocal provision allowing this amount to be taxed in New Mexico.

(1) Under Section 7-7-3(B)(1) NMSA 1978 ("method 1"), it is determined that the amount of estate tax paid to state X on $175,000 is $2,040. This is the amount of credit for method one. (State X's statute does not tax to the full measure of its proportional share of the federal credit.)

(2) Under Section 7-7-3(B)(2) NMSA 1978 ("method 2"), the calculation is: Total credit for T's taxable estate times the quotient of the value of the property in state X divided by the value of the gross estate; that is,

$71,520 x 175,000 = $7,152

1,750,000

(3) The credit allowed in this situation against New Mexico tax due is equal to the smaller of the above two amounts, calculated under methods 1 and 2. The credit against the $71,520 owed to New Mexico would, therefore, be $2,040.

C. Example 2: Same facts as in Example 1, except $1,400,000 of T's gross estate is real property located in and taxed by state X. Method 1 results in $61,840 credit. Method 2 results in $57,216 credit ($71,520 x 8/10). The amount credited against New Mexico tax due is $57,216, because the amount in this case is less using method 2.

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