Cal. Code Regs. tit. 18 § 14051.1

Current through Register 2024 Notice Reg. No. 24, June 14, 2024

Section 14051.1 - Computation

(a) No tracing of the property is required to establish the allowance of the previously taxed property credit. The only factor which needs to be ascertained is the amount of tax paid by the present decedent in the prior estate. This is the maximum amount of the credit.

If the entire present estate does not pass to a single Class A transferee, it is necessary to give to each Class A transferee his proper proportion of the maximum credit. This is the same proportion of the maximum credit as the clear market value of the property transferred to the particular Class A transferee bears to the total clear market value of the present decedent's taxable estate.

In determining the clear market value of the property transferred to a transferee or of the entire estate, the following are deducted:

(1) Community exclusion.

(2) Quasi-community exclusion.

(3) Marital exclusion in the case of a decedent with a date of death on or after January 1, 1976.

(4) Contribution to joint tenancy.

(5) Insurance exclusion.

(6) Intangible exclusion.

(7) Deductions allowed under the Inheritance Tax Law.

(8) Nontaxable property, such as cemetery property and public retirement benefits.

(b) The following are not deducted in determining the clear market value for the purpose of apportioning the credit:

(1) Specific exemption.

(2) Marital exemption in the case of a decedent with a date of death prior to January 1, 1976.

(3) Charitable exemption.

(4) War risk exemption.

(5) Armed services exemption.

This regulation may be illustrated by the following example:

Example. A died on January 6, 1974. The inheritance tax was computed as follows:

	..........................Inventory (all separate property)	..........................$110,000
	..........................Deductions	.......................... 5,000
	..........................Clear market value	..........................$105,000

Adult Son

	..........................Bequest	$15,000
	..........................One-third residue	30,000	$5,000 exempt
		$45,000	..........................Tax on balance	$1,400

Widow

	..........................Two-thirds residue	$60,000	$5,000 exempt
		52,500	Marital exemption
			..........................Tax on balance	150
				$1,550

The adult son died November 4, 1975. He left probate property appraised at $65,000. There were $5,000 of deductions. His estate was divided equally between his adult son and his son's wife.

The calculation of the inheritance tax due is as follows:

	..........................Inventory	..........................$65,000
	..........................Deductions	.......................... 5,000
	..........................Clear market value	..........................$60,000

Adult Son

	..........................One-half residue	$30,000	$5,000 exempt
			..........................Tax on balance	$800
			..........................P.T.P. credit	700
				$100

Daughter-in-law

	..........................One-half residue	$30,000	$2,000 exempt
		$60,000	..........................Tax on balance	$1,880
				$1,980

The calculation of the previously taxed property credit is as follows:

	..........................Class A transferee: Adult son in each estate Tax paid by present decedent in prior estate	$1,400
	..........................Clear market value of transfers to Class A transferees from present decedent	30,000
	..........................Clear market value of present decedent's estate	60,000
	30,000/60,000 x $1,400 = $700 P.T.P. Credit

NOTE: Reference: Section 14071, Revenue and Taxation Code.

Cal. Code Regs. Tit. 18, § 14051.1