Estate Tax

[NotEasy]

A taxpayer passed away in 2009. His spouse is the only heir.

Taxpayer and spouse owned a home valued at about $500,000. They also have a few joint savings and joint investment account with the total balance of $2,000,000. Taxpayer had an IRA account with a balance of $150,000.

Is this the correct way to calculate the amount of the estate?

House:........................................50% of $500,000 = $250,000
Savings and Investment accounts:.50% of $2,000,000 = $1,000,000
IRA account:...............................100% of $150,000 = $150,000

So the amount of the estate is $1,400,000.

Please correct me if I am wrong. Thanks.

[Gretel]

I agree with your calculations, so no Estate tax return needed.

[abby]

depends on the state

What state are they in? A community property state would have a different calculation - and an estate tax return might be needed.

A separate point - I believe some states still have a lower threshold for estate tax returns, so a state return might be required even if no federal 706 is filed.

[NotEasy]

What state are they in? A community property state would have a different calculation - and an estate tax return might be needed.

A separate point - I believe some states still have a lower threshold for estate tax returns, so a state return might be required even if no federal 706 is filed.

Hi abby: How would it be different if they are in California? Would the way of calculation be different from my example?

[abby]

I know just enough to get into trouble...

Hi,

I haven't done a California estate return and haven't done one in Washington state for several years, and I've just done a little browsing - enough to know that state rules and limits have changed since then. When I did the last one, Washington still was requiring returns at something around 600-700k, as I recall. Now it appears they're up to the 2 million.

I also saw something about the state credit repeal to 2010 and California therefore getting no estate tax.

What I am recalling, that prompted my post, is a situation where the entire joint property is required to be reported on the 706 in community property states and receives a full step up. I don't, however, recall if that was for marital property, too, or just other joint property.

My meager contribution to the discussion would be to encourage you to double check those rules before deciding a return is not required.

Sorry I can't be of more help - perhaps someone else can chime in who is doing these returns currently.