Was Florida estate tax due when the federal credit for tax on a prior transfer eliminated all federal estate tax, including the state death-tax-credit amount?

Plain-English summary

No Florida estate tax was due because the available federal credits eliminated all federal estate tax.

The Florida resident had inherited property as the residuary beneficiary of his mother's trust. His estate qualified for the federal credit for tax on prior transfers under Internal Revenue Code section 2013, and that credit, together with the unified credit, consumed the full federal estate-tax amount.

The Department applied section 198.02 and the reasoning of Dickinson v. Maurer. Because no federal estate tax remained, including the amount otherwise computed as the state death-tax credit, the Florida estate likewise owed no estate tax.

What this means for you

The ruling tied Florida's tax result to the federal estate-tax computation. The conclusion depended on the prior-transfer credit being large enough to eliminate the entire federal liability.

Common questions

Q: Why did the estate receive a prior-transfer credit? A: The decedent had inherited property from his mother's estate, which had paid estate tax.

Q: Did the credit merely reduce Florida tax? A: It eliminated the federal estate tax that would have supported the Florida tax, so no Florida estate tax was due.

Q: What if some federal estate tax had remained? A: The ruling did not decide that different calculation.

Citations and references

• Fla. Stat. § 198.02 — Florida estate tax
• I.R.C. § 2013 — credit for tax on prior transfers
• Dickinson v. Maurer, 229 So. 2d 247 (Fla. 1969) — cited relationship between federal and Florida estate tax
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 95C3-001

Original ruling text

Jun 22, 1995

Re: Technical Assistance Advisement No. 95(C)3-001 Estate Tax; Credit for Tax on Prior Transfers Section 198.02, F.S. XXX (Taxpayer)

Dear :

This is in response to your recent request for a technical assistance advisement with respect to a Florida estate tax issue.

Facts

The Taxpayer was a Florida resident as of his death. His taxable estate for Federal estate tax purposes is estimated to be $XX, which results in estate tax after the unified credit of
$XX. The Taxpayer was preceded in death by his mother, and was the residuary beneficiary under her Declaration of Trust. As such, the Taxpayer received $XX (net after payment of all estate taxes and expenses payable from the residuary trust estate) from his mother's gross estate. Accordingly, under Internal Revenue Code s. 2013, the Taxpayer's estate is entitled to a credit for the tax on the prior transfer. Due to the amount of property inherited by the Taxpayer from his mother, and the amount of estate tax paid by her estate, the credit available to the Taxpayer's estate is the full amount of estate tax that would otherwise be due, which is $XX.

Requested Advisement

Whether any estate tax is due to the State of Florida for a resident's estate when the estate is entitled to a credit for tax on prior transfers (under Internal Revenue Code s. 2013) that would eliminate all estate tax due, including the amount that would otherwise be computed as the state death tax credit.

Discussion and Law

Section 198.02, F.S., provides that a tax is imposed upon the transfer of the estate of every person who, at the time of death, was a resident of this state, the amount of which shall be a sum equal to the amount by which the credit allowable under the applicable Federal revenue act for estate, inheritance, legacy, and succession taxes actually paid to the several states exceeds the aggregate amount of all constitutionally valid estate, inheritance, legacy, and succession taxes actually paid to the several states of the United States (other than this state) in respect of any property owned by such decedent or subject to such taxes as a part of or in connection with his estate. All values shall be as finally determined for Federal estate tax purposes.

Under the reasoning of Dickinson v. Maurer, 229 So.2d 247 (Fla. 1969), to the extent that the Federal estate tax (without consideration of the state death tax credit) is consumed by other credits (i.e. the unified credit and the tax on prior transfers), there will be no state estate tax due.

The Florida estate tax is geared to the Federal estate tax. It is held that when an estate of a Florida resident is not subject to Federal estate taxes, it is likewise not subject to Florida estate tax.

Conclusion

Based upon the statutory provisions and the information provided in your request, there will by no Florida estate tax due from the Taxpayer.

This response constitutes a Technical Assistance Advisement under s. 213.22, F.S., which is binding on the Department only under the facts and circumstances described in the request for this advice as specified in s. 213.22, F.S. Our response is predicated on those facts and the specific situation summarized above. You are advised that subsequent statutory or administrative rule changes or judicial interpretations of the statutes or rules upon which this advice is based may subject similar future transactions to a different treatment than

expressed in this response.

You are further advised that this response and your request are public records under Chapter 119, F.S., which are subject to disclosure to the public under the conditions of s. 213.22, F.S. Your name, address, and any other details which might lead to identification of the taxpayer must be deleted by the Department before disclosure. In an effort to protect the confidentiality of such information, we request you notify the undersigned in writing within 15 days of any deletions you wish made to the request or the response.

Sincerely,

Nadine C. Posey
Senior Tax Specialist
Technical Assistance

NCP/mh