2012 -- H 7705

=======

LC00756

=======

STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2012

____________

A N A C T

RELATING TO TAXATION -- ESTATE TAX

     Introduced By: Representatives Reilly, Newberry, Morgan, Costa, and Chippendale

     Date Introduced: February 16, 2012

     Referred To: House Finance

It is enacted by the General Assembly as follows:

1-1

     SECTION 1. Section 44-22-1.1 of the General Laws in Chapter 44-22 entitled "Estate

1-2

and Transfer Taxes - Liability and Computation" is hereby amended to read as follows:

1-3

     44-22-1.1. Tax on net estate of decedent. -- (a) (1) For decedents whose death occurs on

1-4

or after January 1, 1992, but prior to January 1, 2002, a tax is imposed upon the transfer of the net

1-5

estate of every resident or nonresident decedent as a tax upon the right to transfer. The tax is a

1-6

sum equal to the maximum credit for state death taxes allowed by 26 U.S.C. section 2011.

1-7

     (2) For decedents whose death occurs on or after January 1, 2002, but prior to January 1,

1-8

2010 a tax is imposed upon the transfer of the net estate of every resident or nonresident decedent

1-9

as a tax upon the right to transfer. The tax is a sum equal to the maximum credit for state death

1-10

taxes allowed by 26 U.S.C. section 2011 as it was in effect as of January 1, 2001; provided,

1-11

however, that the tax shall be imposed only if the net taxable estate shall exceed six hundred

1-12

seventy-five thousand dollars ($675,000) five million dollars ($5,000,000) provided; further,

1-13

beginning on January 1, 2012 and each January 1 thereafter, said amount shall be adjusted by the

1-14

percentage of increase in the consumer price index for all urban consumers (CPI-U) as published

1-15

by the United States department of labor statistics determined as of September 30 of the prior

1-16

calendar year; said adjustment shall be compounded annually and shall be rounded up to the

1-17

nearest five dollar ($5.00) increment. Any scheduled increase in the unified credit provided in 26

1-18

U.S.C. section 2010 in effect on January 1, 2001, or thereafter, shall not apply.

1-19

     (3) For decedents whose death occurs on or after January 1, 2010, a tax is imposed upon

1-20

the transfer of the net estate of every resident or nonresident decedent as a tax upon the right to

2-1

transfer. The tax is a sum equal to the maximum credit for state death taxes allowed by 26 U.S.C.

2-2

section 2011 as it was in effect as of January 1, 2001; provided, however, that the tax shall be

2-3

imposed only if the net taxable estate shall exceed eight hundred and fifty thousand dollars

2-4

($850,000); provided, further, beginning on January 1, 2011 and each January 1 thereafter, said

2-5

amount shall be adjusted by the percentage of increase in the Consumer Price Index for all Urban

2-6

Consumers (CPI-U) as published by the United States Department of Labor Statistics determined

2-7

as of September 30 of the prior calendar year; said adjustment shall be compounded annually and

2-8

shall be rounded up to the nearest five dollar ($5.00) increment. Any scheduled increase in the

2-9

unified credit provided in 26 U.S.C. section 2010 in effect on January 1, 2003, or thereafter, shall

2-10

not apply.

2-11

     (b) If the decedent's estate contains property having a tax situs not within the state, then

2-12

the tax determined by this section is reduced to an amount determined by multiplying the tax by a

2-13

fraction whose numerator is the gross estate excluding all property having a tax situs not within

2-14

the state at the decedent's death and whose denominator is the gross estate. In determining the

2-15

fraction, no deductions are considered and the gross estate is not reduced by a mortgage or other

2-16

indebtedness for which the decedent's estate is not liable.

2-17

     (c) (1) The terms "gross taxable estate", "federal gross estate" or "net taxable estate" used

2-18

in this chapter or chapter 23 of this title has the same meaning as when used in a comparable

2-19

context in the laws of the United States, unless a different meaning is clearly required by the

2-20

provisions of this chapter or chapter 23 of this title. Any reference in this chapter or chapter 23 of

2-21

this title to the Internal Revenue Code or other laws of the United States means the Internal

2-22

Revenue Code of 1954, 26 U.S.C. section 1 et seq.

2-23

     (2) For decedents whose death occurs on or after January 1, 2002, the terms "gross

2-24

taxable estate" "federal gross estate" or "net taxable estate" used in this chapter or chapter 23 of

2-25

this title has the same meaning as when used in a comparable context in the laws of the United

2-26

States, unless a different meaning is clearly required by the provisions of this chapter or chapter

2-27

23 of this title. Any reference in this chapter or chapter 23 of this title to the Internal Revenue

2-28

Code or other laws of the United States means the Internal Revenue Code of 1954, 26 U.S.C.

2-29

section 1 et seq., as they were in effect as of January 1, 2001., unless otherwise provided.

2-30

     (d) All values are as finally determined for federal estate tax purposes.

2-31

     (e) Property has a tax situs within the state of Rhode Island:

2-32

     (1) If it is real estate or tangible personal property and has actual situs within the state of

2-33

Rhode Island; or

3-34

     (2) If it is intangible personal property and the decedent was a resident.

3-35

     SECTION 2. This act shall take effect upon passage.

=======

LC00756

========

EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N A C T

RELATING TO TAXATION -- ESTATE TAX

***

4-1

     This act would provide all net taxable estates with an exemption from the estate and

4-2

transfer tax of five million dollars ($5,000,000), adjusted annually for the consumer price index

4-3

for urban consumers.

4-4

     This act would take effect upon passage.

=======

LC00756

=======