HF 1690

as introduced - 84th Legislature (2005 - 2006) Posted on 12/15/2009 12:00am

A bill for an act
relating to taxation; estate; modifying the definition
of the taxable estate; increasing the exemption
amount; allowing Minnesota qualified terminable
interest property elections; amending Minnesota
Statutes 2004, sections 291.005, subdivision 1;
291.03, subdivision 1, by adding subdivisions.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2004, section 291.005,
subdivision 1, is amended to read:

Subdivision 1.

Scope.

Unless the context otherwise
clearly requires, the following terms used in this chapter shall
have the following meanings:

(1) "Federal gross estate" means the gross estate of a
decedent as valued and otherwise determined for federal estate
tax purposes by federal taxing authorities pursuant to the
provisions of the Internal Revenue Code.

(2) "Minnesota gross estate" means the federal gross estate
of a decedent after (a) excluding therefrom any property
included therein which has its situs outside Minnesota, and (b)
including therein any property omitted from the federal gross
estate which is includable therein, has its situs in Minnesota,
and was not disclosed to federal taxing authorities.

(3) "Personal representative" means the executor,
administrator or other person appointed by the court to
administer and dispose of the property of the decedent. If
there is no executor, administrator or other person appointed,
qualified, and acting within this state, then any person in
actual or constructive possession of any property having a situs
in this state which is included in the federal gross estate of
the decedent shall be deemed to be a personal representative to
the extent of the property and the Minnesota estate tax due with
respect to the property.

(4) "Resident decedent" means an individual whose domicile
at the time of death was in Minnesota.

(5) "Nonresident decedent" means an individual whose
domicile at the time of death was not in Minnesota.

(6) "Situs of property" means, with respect to real
property, the state or country in which it is located; with
respect to tangible personal property, the state or country in
which it was normally kept or located at the time of the
decedent's death; and with respect to intangible personal
property, the state or country in which the decedent was
domiciled at death.

(7) "Commissioner" means the commissioner of revenue or any
person to whom the commissioner has delegated functions under
this chapter.

(8) "Internal Revenue Code" means the United States
Internal Revenue Code of 1986, as amended through December 31,
deleted text begin 2002 deleted text end new text begin 2004 new text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for decedents
dying after December 31, 2004.
new text end

Sec. 2.

Minnesota Statutes 2004, section 291.03,
subdivision 1, is amended to read:

Subdivision 1.

Tax amount.

The tax imposed shall be an
amount equal to the proportion of the deleted text begin maximum credit deleted text end new text begin gross tax
new text end computed under deleted text begin section 2011 of the Internal Revenue Code, as
amended through December 31, 2000, for state death
taxes deleted text end new text begin subdivision 3a new text end as the Minnesota gross estate bears to the
value of the federal gross estate new text begin (both increased by any amount
under subdivision 2a, paragraph (b), clause (3), excluded from
the federal gross estate and both reduced by the amount of any
liens on real property) new text end . deleted text begin The tax determined under this
paragraph shall not be greater than the federal estate tax
computed under section 2001 of the Internal Revenue Code after
the allowance of the federal credits allowed under section 2010
of the Internal Revenue Code of 1986, as amended through
December 31, 2000. For the purposes of this section, expenses
which are deducted for federal income tax purposes under section
642(g) of the Internal Revenue Code as amended through December
31, 2002, are not allowable in computing the tax under this
chapter.
deleted text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for decedents
dying after December 31, 2004.
new text end

Sec. 3.

Minnesota Statutes 2004, section 291.03, is
amended by adding a subdivision to read:

new text begin Subd. 2a. new text end

new text begin Taxable estate. new text end

new text begin (a) The taxable estate equals
the federal taxable estate, as defined under section 2051 of the
Internal Revenue Code, with the adjustments provided in this
subdivision.
new text end

new text begin (b) The following amounts must be added to the federal
taxable estate if they were deducted or excluded in computing
the federal taxable estate:
new text end

new text begin (1) expenses which are deducted for federal income tax
purposes under section 642(g) of the Internal Revenue Code;
new text end

new text begin (2) state death taxes deducted under section 2058 of the
Internal Revenue Code; and
new text end

new text begin (3) the value of a property or an interest in property that
the decedent transferred (by trust or otherwise) or relinquished
a power with respect to the property during the three-year
period ending on the date of the decedent's death, reduced by
the amount of federal gift tax paid on the transfer to the
extent reflected in the gross estate under section 2035(b) of
the Internal Revenue Code, if:
new text end

new text begin (i) the property (or the interest in the property) would
have been included in the decedent's gross estate if the
transferred interest or relinquished power had been retained by
the decedent on the date of death; and
new text end

new text begin (ii) the transfer or relinquishment of power is a taxable
gift within the meaning of section 2503 of the Internal Revenue
Code.
new text end

new text begin (c) The executor may make a qualified terminable interest
property election, as defined in section 2056(b)(7) of the
Internal Revenue Code, for purposes of computing the marital
deduction under section 2056 of the Internal Revenue Code for
the tax under this chapter that differs from the amount elected
for federal estate tax purposes. The election may not exceed
the federal election by more than the difference between the
applicable exclusion amount under section 2010(c) of the
Internal Revenue Code and the exemption under paragraph (d).
The election must be made on the return for tax under this
chapter and is irrevocable. All tax under this chapter must be
determined using the qualified terminable interest election made
on the Minnesota return. For purposes of applying sections 2044
and 2207A of the Internal Revenue Code to the computation of the
federal and Minnesota gross estates of the surviving spouse,
amounts for which a qualified terminable interest property
election has been made under this section must be treated as
though a valid federal qualified terminable interest property
election under section 2056(b)(7) of the Internal Revenue Code
had been made.
new text end

new text begin (d) The federal taxable estate is reduced by an exemption
amount of $1,500,000.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for decedents
dying after December 31, 2004, but the provisions of paragraph
(b) only apply to gifts made after July 1, 2005.
new text end

Sec. 4.

Minnesota Statutes 2004, section 291.03, is
amended by adding a subdivision to read:

new text begin Subd. 3a. new text end

new text begin Gross tax. new text end

new text begin Gross tax must be computed by
applying the following schedule of rates to the taxable estate:
new text end

new text begin (1) On the first $3,000,000, 7.2 percent;
new text end

new text begin (2) On all over $3,000,000, but not over $3,500,000, 8
percent;
new text end

new text begin (3) On all over $3,500,000, but not over $4,000,000, 8.8
percent;
new text end

new text begin (4) On all over $4,000,000, but not over $4,500,000, 9.6
percent;
new text end

new text begin (5) On all over $4,500,000, but not over $5,000,000, 10.4
percent;
new text end

new text begin (6) On all over $5,000,000, but not over $5,500,000, 11.2
percent;
new text end

new text begin (7) On all over $5,500,000, but not over $6,500,000, 12
percent;
new text end

new text begin (8) On all over $6,500,000, but not over $7,500,000, 12.8
percent;
new text end

new text begin (9) On all over $7,500,000, but not over $8,500,000, 13.6
percent;
new text end

new text begin (10) On all over $8,500,000, but not over $9,500,000, 14.4
percent;
new text end

new text begin (11) On all over $9,500,000, but not over $10,500,000, 15.2
percent; and
new text end

new text begin (12) On all over $10,500,000, 16 percent.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for decedents
dying after December 31, 2004.
new text end