(8)Examples.(a) The decedent died May 18, 2005, with an adjusted gross estate valued at $4 million. The decedent was a dry land wheat farmer and owned 2000 acres of land valued at $2 million ($1,000 per acre) and $500,000 in farm equipment. The decedent was a U.S. citizen, owned and worked the acreage for the last twenty years, and left the farm to his son, a qualified heir. The value of the farm acreage and equipment exceeds the required 50% or more of the adjusted gross estate ($2,000,000 + $500,000 $4,000,000 x 50%). The value of the 2000 acres and the farm equipment can be deducted from the decedent's federal taxable estate. In this example estate tax is not due. The calculations are shown below: Federal taxable estate | $4,000,000 |
Less $2,500,000 farm deduction | - $2,500,000 |
Less $1,500,000 statutory exemption | - $1,500,000 |
Washington taxable estate | $0 |
Although Washington estate tax is not due, the estate is still required to file a Washington estate tax return along with a photocopy of the filed and signed federal return and all supporting documentation.
(b) The decedent died August 28, 2005, with an adjusted gross estate valued at $5 million. The decedent was a hay farmer and owned 600 acres of land valued at $1.8 million ($3,000 per acre) and $500,000 in farm equipment. The decedent was a U.S. citizen, owned and worked the acreage for the last twenty years, and left the farm to his son, a qualified heir. The value of the farm acreage and equipment did not meet the required 50% or more of the adjusted gross estate, therefore, the estate cannot deduct the value of the farm and farm equipment ($1,800,000 + $500,000 Federal taxable estate | $4,000,000 |
Less $1,500,000 statutory exemption | - $1,500,000 |
Washington taxable estate | $3,500,000 |
Based on the tax table, the estate owes $470,000 in Washington estate tax.
(c) The decedent died May 23, 2005, with an adjusted gross estate valued at $1.6 million. The decedent was a tenant hay farmer that owned $400,000 of hay in storage that had been harvested but not sold and $800,000 in farm equipment. The decedent was a U.S. citizen, used the farm equipment in a qualified use for the last six years, and left the equipment to his son-in-law, a qualified heir. The value of the farm equipment met the required 50% or more of the adjusted gross estate so it can be deducted from the decedent's federal taxable estate ($800,000=$1,600,000 x 50%). In this example no estate tax is due. The calculations are shown below: Federal taxable estate | $1,600,000 |
Less $800,000 farm deduction | - $800,000 |
Less $1,500,000 statutory exemption | - $1,500,000 |
Washington taxable estate | $0 |
Although Washington estate tax is not due, the estate is still required to file a Washington estate tax return along with a photocopy of the filed and signed federal return and all supporting documentation.
(d) The decedent died April 7, 2006, with an adjusted gross estate valued at $2.5 million. The decedent owned 100 acres of timberland valued at $100,000 ($1,000 per acre), timber valued at $800,000 ($80,000 per acre), 200 acres of pasture land valued at $500,000 ($2,500 per acre) and $50,000 in farm equipment. The decedent was a U.S. citizen, owned and worked the acreage for the last ten years, and left the timber and farm land to his daughter, a qualified heir. The value of the timberland and farm acreage and equipment exceeded the required 50% or more of the adjusted gross estate therefore the estate can deduct the value of the timber and farm land and farm equipment ($100,000 + $800,000 + $500,000 + $50,000 $2,500,000 x 50%). The calculations are shown below: Federal taxable estate | $2,500,000 |
Less $1,450,000 farm deduction | - $1,450,000 |
Less $2,000,000 statutory exemption | - $2,000,000 |
Washington taxable estate | $0 |
Although Washington estate tax is not due, the estate is still required to file a Washington estate tax return along with a photocopy of the filed and signed federal return and all supporting documentation.