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NYS Estate Tax and Portability
The NYSDTF has issued Technical Memorandum TSB-M-12(4)M to clarify what happens with state estate taxes when a federal estate tax return is being filed only for portability purposes. The memorandum notes that in such a situation, the estate must report the actual value of assets and deductions used to compute the gross estate for New York estate tax purpose.
In June 2012, explains the memorandum, new temporary IRS regulations said that when federal returns are filed only for the purpose of electing portability, the estate does not have to report the value of property qualifying for the marital deduction or charitable deduction. The value of the gross estate can just be estimated based on a "good faith determination."
However, that's not applicable for New York estate tax returns. The memorandum says that a New York taxable estate that files a federal estate tax return under the June temporary regulation section must submit the following:
- A copy of the actual federal estate tax return filed with the IRS.
- A completed (pro forma) Part 5 - Recapitulation (Form 706) and all applicable schedules reporting the actual date of death value of all property subject to the special rule.
Further details and code references are available in the memorandum.