The decedent was 75 and in a nursing home at the time of her
death. She had been drawing on the IRAs for several years.
And, yes, PA wants their 4.5% of all the money according to
that nice Mr. Lyons I spoke with in Harrisburg.

Linda dorfmont E.A,CFP,CSA

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- quote -

Are you sure the IRA's are subject to PA Inheritance Tax???

It would depend on whether or not she had started to
receive, or was eligible to receive qualified distributions.

IRAs are not subject to Inheritance Tax when the decedent is
under the age of 59 1/2 at the time of death. For 401K’ s,
the same provision applies unless the owner of the plan
could have closed out the plan during their lifetime. In
most plans, that right does not accrue until the "normal
retirement age" is reached, which is usually 62 or 65 years
of age.

"Jack" - John H. Fisher - TaxService[at]aol.com
Philadelphia, Pa - Atlantic City, NJ - West Wildwood, NJ
My Newsgroups & Boards at: http://members.aol.com/TaxService/index.html

Where Ignorance is bliss, 'tis folly to be wise!=

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"Linda Dorfmont" <DORFMONT[at]aol.com> wrote:

- quote -

I'd say no. 691(c) is pretty clear in stating the deduction
is for the estate tax.

--
David M. Woods, EA, ChFC, CLU
Woods Financial Services
Norwood, MA 02062
www.woods-financial.com

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The deduction on the Federal return for the estate tax paid on IRD items is
ONLY for the Federal portion of the estate tax. So I don't see how you
could take a deduction on the Federal return for the PA inheritance tax.
Whether there is a deduction on the PA return, I do not know. As you
probably know, CA does not have an inheritance tax; there is only tax if
there is a Federal estate tax. And there is no deduction on the CA return
for estate tax paid on IRD items (Federal or state estate tax).

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My client is the personal rep of her mother's estate
(trust)in PA. The estate has several IRAs set up for each of
the children to inherit when she passed away. Since the IRAs
will be subject to PA inheritance tax, I was wondering if
this death tax would qualify for the 691(c) deduction on the
children's returns as they take the distributions from their
inherited IRAs. I already found out that CA will not allow
it for the CA children to take as dual taxed income but I'm
still hoping for the Feds. Children are resdent all over the
place so I will be advising them all, not just the CA
residents.

On second thought could I deduct it on the final 1041 for
the mother's survivor's trust? then it could pass all at
once to the children as and excess deduction on termination.

Linda Dorfmont EA,CFP,CSA

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