N.J. Admin. Code § 18:26-3A.4

Current through Register Vol. 56, No. 21, November 4, 2024

Section 18:26-3A.4 - Reduction of tax; out-of-State property

(a) The tax, as computed in N.J.A.C. l8:26-3A.2, is reduced by:

1. The portion of said tax that is attributable to property located outside New Jersey. The amount of the tax reduction is calculated by multiplying the tax due on the entire gross estate wherever located by a fraction, whose numerator is the gross value of property located outside the State and whose denominator is the New Jersey entire gross estate, wherever located. In general, for purposes of the calculation described in this paragraph, intangible personal property is considered to be located in New Jersey; and

2. The inheritance, succession, or legacy taxes actually paid this State in respect to any property owned by such decedent or subject to such taxes as part of or in connection with the estate.

(b) If real property located outside of New Jersey is distributed to the decedent's surviving spouse or civil union partner, the credit for out-of-State property cannot be used for that property.

(c) Examples:

1. Ms. B died owning real property in Florida. The real property was reported on the New Jersey estate tax return. The estate can use the credit calculated under (a) above for out-of-State property.

2. Mr. S established a trust containing real property located in a foreign jurisdiction. The real property contained in the trust retains its identity as real property and is subject to tax in the state where the real property is located. Accordingly, the real property within the trust is entitled to the credit calculated under (a) above for out-of-State property.

3. Mrs. W owned XYZ, LLC which was formed in Pennsylvania. XYZ, LLC owns a parcel of Pennsylvania real property. The real property owned by XYZ, LLC does not retain its identity as real property. The estate tax is assessed on the decedent's entire interest in the LLC. Therefore, the out-of-State credit calculated under (a) above is not allowable in this instance for the New Jersey estate tax.

N.J. Admin. Code § 18:26-3A.4

Adopted by 50 N.J.R. 1624(a), effective 7/16/2018