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. 38, September 20, 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.
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).
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.
2.4. Where federal estate tax valuation is different from inheritance tax valuation of the same property. The amount of Federal estate tax deductible for inheritance tax purposes is the amount actually paid or payable, without regard to the valuation of such property of Federal estate tax purposes.
Example. The decedent died April 1, 1959. The fair market value at the date of his death of all property subject to both Federal estate tax and inheritance tax was one hundred thousand dollars ($100,000). On April 1, 1960, the alternate valuation date for estate tax purposes, the value was seventy-five thousand dollars ($75,000). The alternate valuation date was elected by the executor. The estate tax amounted to two thousand dollars ($2,000). Only two thousand dollars ($2,000) will be allowed as a deduction in determining the value of property subject to inheritance tax.
2.5. Information required to support deduction. To facilitate audit of the deduction claimed for Federal estate tax paid, the executor or administrator shall file with the State Tax Commissioner, at the time of filing of the Federal return with the Internal Revenue Service, either (a) a copy of the Federal estate tax return, or (b) a detailed reconciliation of any differences between the property and deductions reported for Federal estate tax purposes and those reported for Federal estate tax purposes and those reported for West Virginia inheritance tax purposes. If any refund or additional payment of Federal estate tax is made by or to the Internal Revenue Service, the person receiving or paying such amount shall give the Commissioner written notice thereof within thirty (30) days after receipt or payment of such amount.
2.6. Effective Date. This ruling shall apply with respect to estates of decedents dying on or after March 6, 1959, (the effective date of section sixteen (a), article two, chapter forty-four of the West Virginia Code).
