2019 -- H 5635

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LC001378

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2019

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A N   A C T

RELATING TO TAXATION - ESTATE AND TRANSFER TAXES - LIABILITY AND

COMPUTATION

     

     Introduced By: Representatives Solomon, Vella-Wilkinson, Canario, O'Brien, and
Newberry

     Date Introduced: February 27, 2019

     Referred To: House Finance

     It is enacted by the General Assembly as follows:

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

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

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     44-22-1.1. Tax on net estate of decedent. Tax on net estate of decedent; portability of

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credit.

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     (a)(1) For decedents whose death occurs on or after January 1, 1992, but prior to January

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1, 2002, a tax is imposed upon the transfer of the net estate of every resident or nonresident

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

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state death taxes allowed by 26 U.S.C. § 2011.

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

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

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

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

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

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seventy-five thousand dollars ($675,000). Any scheduled increase in the unified credit provided

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in 26 U.S.C. § 2010 in effect on January 1, 2001, or thereafter, shall not apply.

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     (3) For decedents whose death occurs on or after January 1, 2010, and prior to January 1,

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2015, a tax is imposed upon the transfer of the net estate of every resident or nonresident

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

 

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

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

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and fifty thousand dollars ($850,000); provided, further, beginning on January 1, 2011, and each

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January 1 thereafter until January 1, 2015, said amount shall be adjusted by the percentage of

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increase in the Consumer Price Index for all Urban Consumers (CPI-U) as published by the

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United States Department of Labor Statistics determined as of September 30 of the prior calendar

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

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dollar ($5.00) increment. Any scheduled increase in the unified credit provided in 26 U.S.C. §

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2010 in effect on January 1, 2003, or thereafter, shall not apply.

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     (4) For decedents whose death occurs on or after January 1, 2015, a tax is imposed upon

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

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

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§ 2011, as it was in effect as of January 1, 2001; provided, however, that a Rhode Island credit

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shall be allowed against any tax so determined in the amount of sixty-four thousand four hundred

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($64,400). Any scheduled increase in the unified credit provided in 26 U.S.C. § 2010 in effect on

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January 1, 2003, or thereafter, shall not apply; provided, further, beginning on January 1, 2016,

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and each January 1 thereafter, said Rhode Island credit amount under this section shall be

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adjusted by the percentage of increase in the Consumer Price Index for all Urban Consumers

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

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

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be rounded up to the nearest five dollar ($5.00) increment.

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     (5)(i) For purposes of this section, an additional credit against the tax computed under

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subsection (4) of this section shall be allowed with respect to a surviving spouse of a deceased

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spouse dying after December 31, 2018. The additional credit shall be designated as the "deceased

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spousal unused credit amount," and shall be equal to the lesser of:

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     (A) The credit amount provided in subsection (4) of this section; or

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     (B) The excess of:

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     (I) The credit amount of the last deceased spouse of such surviving spouse, over

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     (II) The amount of such credit amount with respect to which the tax is determined under

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subsection (4) of this section on the estate of such deceased spouse.

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     (ii) A deceased spousal unused credit amount may not be taken by a surviving spouse

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unless the executor of the estate of the deceased spouse files a Rhode Island estate tax return on

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which such amount is computed, and unless the executor makes an election on such return that

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such amount may be taken into account. The election, once made, shall be irrevocable. No

 

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election may be made if the return is filed after the time prescribed by law (including extensions)

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for filing the return.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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Code or other laws of the United States means the Internal Revenue Code of 1954, 26 U.S.C. § 1

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

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

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

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

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Rhode Island; or

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

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     SECTION 2. This act shall take effect upon passage and shall apply to the estates of

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decedents dying after December 31, 2018.

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO TAXATION - ESTATE AND TRANSFER TAXES - LIABILITY AND

COMPUTATION

***

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     This act would establish portability of predeceasing spouse's unused credit against the

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estate tax by a surviving spouse.

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     This act would take effect upon passage and would apply to the estates of decedents

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dying after December 31, 2018.

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