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The Impact of the Decoupling of
State Estate Taxes on a Taxpayer's Choice of Domicile, Journal of Taxation,
Jul 2004 |
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Journal of Taxation (WG&L) |
ESTATES, TRUSTS, & GIFTS
Author: By Dean L. Surkin
DEAN L. SURKIN is a
principal with Rosen Seymour Shapss Martin & Company, LLP, CPAs, in New
York City. He is also an attorney and an adjunct professor at the Pace
University School of Business, the N.Y.U. School of Professional Studies, and
Hunter College. He has previously written for The Journal.
The drastic changes made by
EGTRRA to the estate tax may have overshadowed the change in the credit for
state estate taxes. The phase-out of the credit and its replacement by a
deduction may mean an increase in a taxpayer's total tax bill, depending on
whether the state of domicile uses a sponge tax or is decoupled from the new
federal regime. A change in domicile, and a change in the manner in which
property is titled, may be effective in saving significant amounts of state
estate tax.
From 1976 to 2001, the estate and
gift tax law enjoyed a period of stability after three-quarters of a century of
theorizing and compromising. In 2001, however, EGTRRA changed the rules of the
game. 1 Lost
in the shuffle, the changes to the state estate tax credit have been little
remarked upon in public debate. Nevertheless, they not only change the ground
rules of a compromise dating back to the mid-1920s but also may open the
floodgates to a new round of interstate competition.
The estate tax has been a feature
of the Anglo-American legal system for hundreds of years at least. One could
even say that the feudal system, under which a serf's property reverted to the
lord of the manor on the serf's death, was the ultimate estate tax.
The federal government began
taxing estates as long ago as 1797, 2 only to repeal the
tax in 1802 3
and re-enact it in 1862. 4 The Tax Act of
1894, 5
which contained an income tax, also contained an estate tax. When the act was
held unconstitutional in Pollock v. Farmers' Loan & Trust Co., 3 AFTR 2557, 157
US 429, 39 L Ed 759 (1895), the estate tax also was voided.
The War Revenue Act of 1898 6 once again imposed
a federal estate tax. This legislation is important to the modern estate tax
and to the genesis of the state estate tax credit because of the Supreme
Court's decision upholding the Act in Knowlton v. Moore, 3 AFTR 2684, 178
US 41, 44 L Ed 969 (1900).
The taxpayer advanced two
arguments in favor of voiding the tax. The first was that the estate tax was a
direct tax subject to apportionment. Since it had not been apportioned
according to population among the states, taxpayer argued it was
unconstitutional. The Court disagreed, holding that the estate tax is an
indirect excise tax and is not subject to apportionment. This reasoning
conforms well with current thinking that the estate tax, being a tax on the
transfer of property, is an excise tax and not an income tax.
The 16th Amendment, which permits
Congress to impose taxes on income, does not moot the holding in Knowlton,
because the 16th Amendment concerns only income taxes. It otherwise does not
limit or expand Congress's taxing power. 7
The taxpayer's second argument in
Knowlton was that the estate tax is the legal province of the states,
not of the federal government. Again the Court disagreed, finding that the
taxpayer was confusing the states' power to regulate inheritance with the power
to tax the transaction. The federal estate tax law neither limited or expanded
inheritance rights nor controlled the manner of inheritance, all of which were
within the purview of the states. Rather, the estate tax simply taxed the
transfer, as the states defined the transfer. This second argument surfaced
again two decades later, as described below.
Congress once again repealed the
estate tax, in 1902, only to re-enact it once more in 1916. The estate tax has
remained in existence continuously since.
The credit.
Within a few years after the 1916 re-enactment, the states began objecting to
the federal estate tax because they felt that estate and inheritance taxes were
the province of the states (in substance, the taxpayer's second argument in Knowlton
v. Moore). When the federal government began taxing the same sources, the
federal burden on this revenue stream made it politically difficult for the
states to impose their own burden on the same stream.
Conferences held under auspices
of National Tax Association urged the federal government to withdraw from
estate tax field. 8
The federal response was the state death tax credit, enacted in 1924 and
expanded in 1926. In effect, the federal government began sharing estate tax
revenue with the states. 9 According to the Tax
Revision Studies, "[t]he main purpose of the crediting provision of
the Federal Revenue Act of 1926 was to equalize the tax burden of the death
duties between the various states." 10 The Tax
Revision Studies suggested that the states have the option of abolishing
their own "death taxes" and receive instead a fixed proportion of federal
estate and gift tax collection in their states. 11 The Tax
Revision Studies concluded that it did not work, because the various states
still had their own estate taxes and inheritance taxes, and different
definitions of gross estate and deductions.
In the years between 1937 and
2001, however, the states changed their estate and inheritance tax regimes
significantly, with the trend being that more states adopted a "sponge
tax" (i.e., one that fully absorbs the federal credit). Then came EGTRRA
in 2001, which enacted the phase-out of the state estate tax credit (starting
in 2002) and the transformation of the credit into a deduction (2005 and
thereafter). Other articles have traced the effect of EGTRRA on state estate
taxes and state tax revenue. This article will focus on the difference in state
estate taxes, as they affect nonresident decedents.
The Florida and New York estate
tax provisions will be used to illustrate the possible consequences of the
EGTRRA changes. The former has followed federal law while the latter has
"decoupled" from federal law.
Floridians feel so strongly that
their estate tax should be limited to the federal credit for state estate and
inheritance taxes that they have enshrined this in their state constitution.
12 Thus, Florida
estate tax law has remained coupled to the federal law post-2001: "The
Florida constitution prohibits an estate tax greater than the federal
pickup." 13
Florida tax on estates of
residents. The Florida tax equals the federal tax credit minus the
amount of estate taxes paid to other states. 14 The state
regulations explain this to mean that if a Florida resident owns only property
with a Florida situs, the Florida tax equals the entire credit. If, however,
the resident decedent owns property sited in another state, the Florida tax is
reduced by taxes paid to the other state. 15
Florida tax on estates of
nonresidents. The tax is imposed on:
Real property in the state.
Tangible personal property with a situs in the state.
Securities of a corporation organized in Florida.
The tax is equal to the federal
credit multiplied by a fraction, the numerator of which is property taxable in
Florida and the denominator of which is the decedent's entire gross estate.
16 Since the
federal credit is zero, the Florida tax on nonresidents is zero.
New York formerly had a separate
estate tax. In 1998, it conformed its estate tax to the federal state estate
tax credit, effective for estates of decedents dying after 1/31/00. 17 New York, however,
computes its estate tax based on the federal credit as computed under the
Internal Revenue Code in existence on 7/22/98. 18 Thus, the New
York estate tax is decoupled from the changes enacted by EGTRRA. Even though
federal law phases out the credit, New York's tax will be based on the full
amount of the credit calculated pursuant to pre-EGTRRA law.
New York tax on estates
of residents. The tax equals the federal credit for state estate taxes
(calculated with reference to pre-EGTRRA law). 19 New York allows
a credit for estate and inheritance taxes paid to another state. 20 The credit is
the lesser of:
The tax paid to the other state.
The amount of the federal credit for state estate taxes multiplied
by a fraction, whose numerator is the decedent's federal gross estate reduced
by the New York gross estate and whose denominator is decedent's federal gross
estate. The New York gross estate is the federal gross estate minus real
property and tangible personal property having an actual situs outside New
York. 21
Thus, the fraction described above is the gross estate located outside New York
divided by the federal gross estate.
If the other state is Florida,
the tax paid to Florida is calculated as follows: Federal credit for state
estate taxes, multiplied by a fraction, the numerator of which is property with
a situs in Florida and the denominator of which is the entire gross estate.
22 Since the
federal credit for state estate taxes is zero, the tax paid to Florida is zero.
Thus, New York's credit for Florida estate taxes is zero.
New York tax on estates
of nonresidents. The tax on a nonresident is calculated as if the
decedent were a resident of New York, with a small but significant change in
computing the credit for another state's tax: The New York gross estate does
not include any intangible personal property. 23 This ensures
that the estate tax incurred due to intangible personal property is allocated
outside of New York.
The current New York Estate Tax
Return (Form ET-706, 2/04) implements this calculation in a fashion that many
practitioners have questioned, because New York estate tax may exceed the value
of property located in New York. The New York State Department of Taxation and
Finance has responded informally by saying that it soon will issue an updated
form ET-706. The proposed new form will calculate the tax on nonresidents as
equal to the federal credit times a fraction whose numerator is the value of
property located in New York and whose denominator is the entire estate. This
calculation seems to contradict the statute, and may require a technical
amendment by the legislature. 24
New York law determines the situs
of property differently from Florida law. For example, Florida includes
securities of Florida corporations, 25 but New York
does not include securities of New York corporations. 26 The possible
consequences, both positive and negative, are illustrated by the following
examples.
Example 1: A New
York domiciliary who owned real estate in Florida died in 2000. The Florida tax
equals the federal credit multiplied by a fraction whose numerator is the value
of the Florida real estate and whose denominator is the gross estate. The New
York tax is the federal credit minus lesser of:
The tax paid to Florida.
The federal credit multiplied by property sited outside of New
York divided by federal gross estate, which in this example equals the tax paid
to Florida.
Simple arithmetic shows that the
total tax paid by the decedent equals the federal tax alone:
Tax paid to Florida = federal
credit × (value of Florida property/gross estate)
Tax paid to New York = federal
credit − [federal credit × (value of Florida property/gross estate)]
Federal tax = federal tax −
federal credit
Sum of New York and Florida tax =
federal credit × (value of Florida property/gross estate) + federal credit
− [federal credit × (value of Florida property/gross estate)]
Thus, the sum of New York and
Florida tax = federal credit
Sum of New York tax + Florida tax
+ federal tax = federal credit + (federal tax − federal credit) = federal
tax
This is exactly the result that
was thought desirable in the Tax Revision Studies 67 years ago.
Example 2: The
facts are the same as in Example 1, except that the decedent died in 2004. The
Florida tax is zero. The New York tax is the federal credit as allowed under
pre-EGTRRA federal law, minus the lesser of:
The tax paid to Florida.
The federal credit multiplied by property sited outside of New
York divided by the federal gross estate.
Since the tax paid to Florida is
zero, the credit for Florida tax is zero. Therefore, the New York tax equals
the entire federal credit as allowed under pre-EGTRRA federal law. In 2004, the
federal tax equals the tentative tax minus 25% of the credit for state estate
and inheritance taxes. The sum of all three taxes is calculated as follows:
Florida tax = zero.
New York tax = the federal credit under pre-EGTRRA law.
Federal tax = the federal tax minus 25% of the credit for state
estate and inheritance taxes.
Thus, the sum of all three taxes
equals the federal tax plus 75% of the pre-EGTRRA credit.
Under the pre-EGTRRA law, the
total amount of federal, Florida, and New York taxes was unaffected by the
imposition of state estate taxes. The New York resident credit had the effect
of sharing the federal estate tax credit between Florida and New York. Under
current law, however, the New York tax has the effect of increasing the total
estate taxes paid (federal and New York). There is no revenue sharing between
New York and Florida.
If instead both states had a law
like New York's, the New York credit for another state's tax would
result in revenue sharing with the other state, but the total of all three
taxes would still be the federal tax plus 75% of the credit.
Example 3: A
Florida domiciliary who owned real estate in New York died in 2000. The New
York tax equals the federal credit multiplied by a fraction whose numerator is
the value of the New York real estate and whose denominator is the gross
estate. The Florida tax is the federal credit minus a credit for the tax paid
to New York. 27
As in Example 1, where the New
York domiciliary owned real estate in Florida, simple arithmetic shows that the
total tax paid by the decedent equals the federal tax alone. Thus in 2000,
before the phase-out of the state estate tax credit, the tax is the same for a
New York resident owning real estate in Florida as for a Florida resident
owning real estate in New York.
Example 4: The
facts are the same as in Example 3, except that the decedent died in 2004. The
Florida tax is zero. The New York tax equals the federal credit multiplied by a
fraction whose numerator is the value of the New York real estate and whose
denominator is the gross estate. See the discussion above regarding the
difference between this calculation, propounded informally by the New York
State Department of Taxation and Finance, and the calculation pursuant to the
statute. The latter approach would take the federal credit for state estate
taxes minus the tax paid to Florida (zero); thus, the New York tax would equal
the entire federal credit for state estate taxes, even if the value of the
property located in New York were less than the amount of tax paid to New York.
The federal tax equals the
tentative federal tax minus the lesser of the taxes actually paid to New York
or 25% of the federal credit for state estate taxes.
The sum of all three taxes may
equal the federal tax or it may exceed the federal tax. As long as the value of
property located in New York is 25% or less of the value of the gross estate,
the tax paid to New York will equal the amount allowed as a credit against the
federal tax, and thus the total tax will equal the federal tax (without the
credit).
As noted above, the total of all
three taxes for a New York resident with property in Florida equals the federal
tax plus 75% of the pre-EGTRRA credit. As long as the Florida resident has some
property located outside of New York, the Florida resident will pay a smaller
overall tax.
Suppose the decedent's real
estate was a cooperative apartment rather than a condominium or similar direct
interest in real estate. The co-op interest is a stock interest in the
cooperative corporation, coupled with a proprietary lease that permits the
tenant-shareholder to occupy the apartment associated with the shares of stock.
Cooperative apartment
corporations must be organized in the state in which the building is owned;
they cannot be, e.g., Delaware or British Virgin Islands corporations (unless
the building is located in one of those jurisdictions). Thus, a Florida co-op
is a Florida corporation. If the decedent owned a Florida co-op, the decedent
owned stock in a Florida corporation—not Florida real estate. Under Florida
law, the intangible represented by stock in a Florida corporation is sited in
Florida. Thus the Florida co-op apartment will be have a situs in Florida.
The New York rule, however, is
different. In a non-estate tax case concerning the enforcement of a judgment,
the New York Court of Appeals (the state's highest court) held that a co-op
apartment was personalty, not realty, for purposes of liens attaching. 28 The New York
Surrogate's Court also specifically held that a co-op apartment in Florida is
personal property, not real property. 29
The New York Department of
Taxation and Finance completely concurs. In a detailed Technical Service Bureau
Memorandum examining the laws of Connecticut, Florida, Massachusetts, and
California in addition to the laws of New York, it held that "in auditing
estate and gift tax returns, a condominium is real property and a cooperative
is intangible personal property." 30
Therefore, it is well settled
that New York treats a co-op apartment as intangible personal property that has
no particular situs in New York.
Suppose a New York resident owns
a co-op in Florida. Florida treats it as Florida-sited property because it is
stock in a corporation incorporated in Florida. New York treats it as part of
the New York gross estate because it is intangible property owned by a New York
resident. It is readily apparent that there could be a huge advantage for the
taxpayer who owns co-ops in both Florida and New York to be deemed a Florida
domiciliary.
Suppose real estate is not held
in cooperative form, such as investment real estate. If the property is located
in New York and the owner transfers ownership to a corporation in exchange for
the corporation's stock, the corporation's stock is deemed to be intangible
property that is sited in the state of decedent's domicile.
If the property is located in
Florida and the owner transfers ownership to a corporation in exchange for the
corporation's stock, the corporation's stock is deemed sited in Florida only if
the corporation is a Florida corporation. A foreign corporation may hold real
estate in Florida without being required to become authorized in Florida. 31 But if the real
estate is rental property, the situation is different: the corporation is not
merely holding title to real estate, and it will have to become authorized to
do business in Florida. That would presumably subject the corporate stock to
Florida's jurisdiction. Nevertheless, the impact would seem minor because the
Florida estate tax will be zero starting in 2005, when the federal credit for state
estate taxes becomes zero.
The planning opportunities are
clear: a New York domiciliary holding property in both New York and Florida
should take every step available to transfer the New York holdings to
corporations, and to transfer domicile to Florida. And corporate ownership is
not the only vehicle—the New York domiciliary may transfer the property to
partnerships or LLCs and achieve the same result. In Matter of Finkelstein,
40 Misc 2d 910, 245 NYS2d 225 (Surr. Ct., Rockland County 1963), the court
held that a partner's interest in a partnership is personal property and is
intangible property. 32
Because single-member LLCs are
treated as disregarded entities for federal tax purposes, they also may be
treated as if the decedent had directly owned the property held by the
single-member LLC for some state law purposes. Therefore, it might be best to
transfer the property to an LLC with at least one other member. Furthermore,
there should be non-tax reasons for the transfer, so the transactions are not
later characterized as sham transactions.
Since forming a partnership or
LLC to hold title to the property located in a particular state is part of
estate planning, presumably the other partners/members will be members of the
taxpayer's family. The taxpayer must have more than mere intent to create a
family partnership. 33
The transfer of partnership interests by gift may be sufficient, but there must
be a bona fide transfer of control to the recipient. 34
Practitioners seeking to use
partnerships or LLCs cannot ignore the holdings in Estate of Strangi, 115 TC 478 (2000),
aff'd in part and rev'd in part 89 AFTR 2d
2002-2977, 293 F3d 279 (CA-5, 2002), on remand TC Memo 2003-145,
RIA TC Memo ¶2003-145, 85 CCH TCM 1331 . 35 Considering the
hazards posed by Strangi, a practitioner may decide to use a corporate
entity instead of a partnership or LLC.
In forming a corporation instead
of a partnership/LLC, there must be some business purpose or the corporation
may be disregarded for tax purposes. 36 If a Florida
domiciliary owned real estate in New York, there would have to be ancillary
probate proceedings in New York regarding the real estate. Query whether
avoiding ancillary probate in New York would be enough of a non-tax reason for
the corporation to be respected. The Oregon Supreme Court, for example, has
held that the state properly imposed inheritance tax on a joint tenancy that
was created to avoid probate. 37 Similarly, the
California Supreme Court held that an inter vivos trust, created to avoid
probate, incurred a higher tax than direct transfer to the surviving spouse
would have. 38
In New York, Matter of the
Petition of Estate of Saraszewski, TSB-H-81(11)M, 07/31/81, seems to hold
to the contrary, but a close reading of the case shows that while decedent made
a purported gift to avoid probate, she retained all beneficial rights to the
real estate during her life, and therefore it was properly included in her
estate. Since the states will readily impose additional estate tax due
to a construction that avoids probate, for consistency they should recognize a
transaction that avoids probate and yields less estate tax. Tax departments are
often not bound by logical consistency, however, particularly when various
states face budgetary shortfalls.
The practitioner should examine
the laws of the taxpayer's domicile, and the laws of other states in which the
taxpayer already owns real estate or may own real estate in the future.
As noted, taxpayers generally
have a choice between using some type of pass-through entity or a corporation
to hold title to real property.
LLC or partnership.
Transfer from the property owner to a single-member LLC is a non-event for tax
purposes, since the single-member LLC is a disregarded entity. 39 For example, in Ltr. Rul. 9807013 the
IRS treated the receipt of replacement property by a single-member LLC as if
the member had directly received the replacement property.
The single-member LLC may admit
other members either by a gift or a sale of interests in the LLC. This is
treated as if the property were contributed to a newly formed partnership.
40 The gift of
interests in the LLC gives rise to the issue of correct valuation of the gift
for gift tax purposes. A minority interest typically is subject to a discount.
If the donor retains a senior interest, Section 2701 et
seq. applies, and the retained interest is valued at zero while the gift
interest is valued at the entire amount of the property.
Practitioners also should
consider the impact of Strangi on the client's particular situation, and
take care that there is a bona fide transfer of control.
Corporation.
Forming a corporation generally is free of federal income tax consequences
under Section 351 . The
owner of the property may choose to use a corporation located outside of the
state in which the property is held, as long as the property is not income
producing. After formation, the owner may give a portion of the stock to
various family members. Electing S corporation status for the corporation
eliminates any income tax at the corporate level, although not the requirement
to file income tax returns.
Making a gift of a portion of the
stock after formation of the corporation most likely qualifies for a minority
discount for gift tax purposes. It would seem that a gift of a portion of the
property before forming the corporation also should qualify for some minority
discount, but this is not necessarily so. Furthermore, if the owner gives a
portion of the property to his or her heirs, and then they all transfer their
interests in the property to a newly formed corporation, there may be
additional real estate transfer consequences. In New York, however, the
transfer from an owner to a wholly owned corporation is exempt from real estate
transfer tax. 41
Furthermore, the subsequent transfer of a minority interest in the
corporation's stock also is exempt from real estate transfer tax. 42
In any event, the lesson of Strangi
applies here, too: the owner must actually transfer a measure of control when
transferring an interest in the corporate owner of the property.
"Domicile" is the place
where taxpayer has a permanent home, i.e., the legal residence. It is the place
to which a taxpayer intends to return if he or she is temporarily someplace
else. A person can have more than one residence but only one domicile. 43
The concept of domicile is
broader than just a tax concept. For income tax purposes, a state may tax its
own domiciliaries, and it also may tax anyone who is resident in the state. As
discussed above, the estate taxation of a domiciliary differs from the estate
taxation of a resident.
A person is never without a
domicile. The initial domicile is the place of birth, and there must be an
intent to change domicile coinciding with a physical presence in order to
change one's domicile. 44
As a guideline, several states
have adopted the Cooperative Agreement on Determination of Domicile, 10/1/96,
issued by the North Eastern States Tax Officials Association (NESTOA). 45 The agreement
sets out criteria for determining domicile:
Home (location; whether owned or
rented; use; size and value).
Time spent (whether retired or
actively involved in business; travel; overall lifestyle).
Items "near and dear"
(location of items of significant sentimental value or items that enhance the
quality of life).
Active business involvement.
Family connections (when the first
four factors are not conclusive). 46
Changing domicile.
A taxpayer may change his or her domicile for any reason, even whim or caprice.
47 In Wolff
v. Baldwin, 9 NJ Tax 11 (N.J. Tax Ct., 1986), the court quoted Lyon v.
Glaser, 288 A2d 12 (1972), as holding that "the change [of domicile]
may be made to avoid taxation, so long as the necessary ingredients for
establishment of the new domicile are present."
The burden of proof is on the
taxpayer to show that the domicile has been changed. 48 The test is one
of overall intent, as shown by all the facts. 49 The facts
include the following indicators:
Voter registration.
Driver's license.
State in which vehicle is registered.
Location of bank account. 50
Ties to community (religious congregation membership; library
card).
Home ownership (though one may own homes in various places, so
this is not definitive). 51
Location of permanent employment. 52
Location of family (i.e., spouse and minor children).
Executing a will declaring the new state as domicile, in
conjunction with the other factors mentioned above.
The more factors that tie the
taxpayer to the new location, the more likely it is that taxpayer has changed
domicile.
The phase-out of the federal
credit for state estate and inheritance taxes, together with the fact that some
states have de-coupled their "pick-up" tax from the federal
phase-out, has led to disparity of taxation among the states. Persons with
property in several states have an opportunity to change their domicile and at
the same time convert their tangible or real property to intangible interests
in corporations, partnerships, or LLCs that may avoid taxation in the states
other than their state of domicile.
In the absence of additional
federal legislation, the sunset provisions of EGTRRA will cause the situation
to change in 2010 and once again in 2011. In the intervening years, Congress
may change any of these dates, extend the repeal of the estate tax, or
eliminate it entirely. Any estate plan should include contingency provisions to
account for both the year of death and fluctuations in the state of the law at
that time.
This article identifies the tax
considerations when the taxpayer has a choice between a New York or a Florida
domicile. For those considering departure from a jurisdiction other than New
York and/or to a jurisdiction other than Florida, the answers will be different
but the questions will be the same. Thus the article is intended to help in
constructing a matrix regardless of the jurisdictions involved.
Practitioners must be alert to
the types of property owned by their clients and the treatment of such property
for estate tax purposes by the jurisdiction in which the property is sited and
by the client's domicile, if different. It may be advantageous to hold real
property through a corporation, depending on how each affected jurisdiction
treats intangible personal property such as stock, or to change a taxpayer's
domicile, depending on how each affected jurisdiction taxes the property of
residents and nonresidents.
See generally Blattmachr and Detzel,
"Estate Planning Changes in the 2001 Tax Act—More Than You Can
Count," 95 JTAX 74 (August
2001).
1 Stat. at L. 527, chap. 11.
2 Stat. at L. 148, chap. 19.
12 Stat. at L. 485, chap. 119.
28 Stat. at L. 509, chap. 349.
30 Stat. at L. 448, chap. 448.
Pledger, 47 AFTR 2d 81-1234,
641 F2d 287, 81-1 USTC ¶9314 (CA-5, 1981), cert. den.
See Treasury Department Staff Memo, Tax
Revision Studies: Estate and Gift Taxes, dated September 1937, Part II, ¶3
(hereafter "Tax Revision Studies"). See
www.tax.org/thp/Civilization/Documents/Surveys/hst23733/23733-1.htm.
Id., Part III, ¶2.
Id., Part III, ¶3.G.
Id., ¶11. Note this early use of the
pejorative term "death taxes" to refer to state estate and
inheritance taxes.
Florida Constitution, section 5(a).
See McLaughlin, "Recent Federal Tax
Legislation and the States, July 2002 Update," National Conference of
State Legislatures, www.ncsl.org, table 2.
Fla. Stat. Ann. section 198.02.
Fla. Admin. Code Rule 12C-3.0035.
Fla. Stat. Ann. section 198.03.
See N.Y. Tech. Service Bureau Memo.
TSB-M-97(8)M, 12/31/97.
See N.Y. Tech. Service Bureau Memo.
TSB-M-02(2)M, 03/21/02.
N.Y. Tax Law section 952(a).
Id., section 952(b).
Id., section 954(a).
Pursuant to Fla. Stat. Ann. section 198.03.
N.Y. Tax Law section 960(b).
This issue is beyond the scope of this
article. See generally Barasch and Schissler, "The New York Non-Resident
Estate Tax: A Tax That Can Be Less Than it Seems to Be," 36 NYSBA Trusts and
Estates Law Section Newsletter No. 4 (Winter 2003), page 4 (discussing an
unreported case from the State Tax Commission that also concludes a technical
amendment may be needed).
Fla. Stat. Ann. section 198.03.
N.Y. Tax Law section 960(b).
Fla. Stat. Ann. section 198.02.
State Tax Commission v. Shor, 371 NE2d 523
(1977).
Matter of Estate of Jack, 126 Misc 2d 1060,
484 NYS2d 489 (N.Y. Surr. Ct., 1985).
N.Y. Tech. Service Bureau Memo. TSB-M-81(1),
02/20/81.
Fla. Stat. Ann. section 607.15(2)(m).
See also In re Havemeyer's Estate, 217 NE2d
26 (1966), rearg. den.
Ramos, 21 AFTR 2d 1136,
393 F2d 618, 68-1 USTC ¶9337 (CA-9, 1968).
Reg. 1.704-1(e)(1)(iii).
See Mezzullo, "Is Strangi a
Strange Result or a Blueprint for Future IRS Successes Against FLPs?," 99 JTAX 45 (July
2003); Korpics, "The Practical Implications of Strangi II for
FLPs–A Detailed Look," 99 JTAX 270
(November 2003). See also Mezzullo, "Fifth Circuit's Remand in Kimbell
Does Not Provide Carte Blanche for All FLPs," 101 JTAX 41 (July
2004).
Moline Properties, 30 AFTR 1291,
319 US 436, 87 L Ed 1499, 43-1 USTC ¶9464 (1943).
Dworett v. Department of Revenue, 602 P2d
1071 (1979).
Kirkwood v. Bank of America Nat. Tr. and
Sav. Assn., 273 P2d 532 (1954).
Reg. 301.7701-2(c)(2).
Rev. Rul. 99-5, 1999-1 CB 434.
20 NYCRR [New York State Codes, Rules and
Regulations] section 575.10.
N.Y. Tax Law section 1401(e); 20 NYCRR
section 575.6(a).
Black's Law Dictionary (5th ed.,
1979), page 435, cited in Goffredo v. Director, Division of Taxation, 9 N.J.
Tax 135 (1987).
DeWitt v. McFarland, 537 P2d 20 (1975). See
also Matter of Newcomb's Estate, 84 NE 950 (1908).
NESTOA includes the states of Maine, New
Hampshire, Vermont, Massachusetts, Connecticut, Rhode Island, New York, New
Jersey, Pennsylvania, Delaware, and Maryland, as well as the District of
Columbia, New York City and Philadelphia.
See State Taxes (RIA, 2003), ¶55,205.
See Matter of Newcomb's Estate, supra
note 44.
Beedy v. District of Columbia, 126 F2d 647
(App. D.C., 1942).
Citizens Bank & Tr. Co. v. Glaser, 357
A2d 753 (1976).
See, for example, Hagan v. Arizona Dept. of
Revenue, Arizona Bd. of Tax Appeals, Docket No. 1736-98-I, 12/01/98.
Claiming the homestead rebate for a New
Jersey house showed that the taxpayer still considered his domicile to be New
Jersey, according to Wolff v. Baldwin, 9 NJ Tax 11 (N.J. Tax Ct., 1986).
See Madsen v. Arizona Dept. of Revenue,
Arizona Bd. of Tax Appeals, Docket No. 1813-99-I, 02/22/00.
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