Guidance Just Issued From New York Regarding Federal Portability...No "706 Lite" for New York Estates and IRS Posts Revised Draft 2012 Gift Tax ReturnManaging Director & Head of Wealth AdvisoryLazard Wealth Management LLC
The New York State Department of Taxation and Finance has just issued TSB-M-12(4)M - New York State Reporting Requirements for Certain Estates Making a Federal Portability Election, and the IRS has posted a revised draft Form 709.
Special Federal Rule For Estates Filing Solely To Make The Portability Election...
Pursuant to temporary regulations released by the IRS on June 15, 2012, estates that do not otherwise have a filing requirement (ie, Form 706 is filed solely to elect portability) do not have to report the value of certain property that qualifies for the marital or charitable deduction. To take advantage of this special rule, the executor must report the assets on the appropriate schedule, but without any value on the schedule itself and estimate in good faith and with due diligence the total value of the gross estate.
But No "706 Lite" For New York Estates...
According to the Technical Memorandum, the New York State estate tax is generally conformed to the Internal Revenue Code of 1986, including all amendments enacted on or before July 22, 1998. As a result, the special valuation rule does not apply for New York State estate tax purposes.
Accordingly, even estates filing solely to take advantage of portability that are eligible for the special rule for federal purposes must submit the following when filing Form ET-706, New York State Estate Tax Return (the New York filing threshold is $1MM):
• A copy of the actual federal estate tax return filed with the IRS; and
• 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.
IRS Posts Revised Form 709 For 2012
The IRS posted a revised draft 2012 Gift Tax Return on September 26. For the most part, the revisions to the form have been made to Schedule C - Deceased Spousal Unused Exclusion (DSUE) Amount, where a number of lines have been added to the Schedule as "Reserved", with no further explanation. Draft instructions have also been posted.
Links to TSB-M-12(4)M, the latest draft Form 709, and the latest Form 709 draft instructions are included below, for your information.
TSB-M-12(4)M: http://www.tax.ny.gov/pdf/memos/estate_&_gift/m12_4m.pdf
Form 709 Instructions: http://www.irs.gov/pub/irs-dft/i709--dft.pdf
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