At the present time, there are basically two types of state death taxes-state es
ID: 2759016 • Letter: A
Question
At the present time, there are basically two types of state death taxes-state estate taxes and inheritance taxes. Under current law, state death taxes are a deduction for the entire amount of state death taxes paid for federal estate tax purposes. Decoupling refers to states that have both an inheritance tax and a state estate tax. If a decedent's estate does not have to file a federal estate tax return (Form 706), there is no deduction for state death taxes paid. In many states, beneficiaries of different classes are taxed at different rates. The closest blood relatives of a decedent typically have the lowest state death tax rate and the largest exemption. Real estate transferred at a decedent's death is taxed only by the decedent's state of domicile. Intangible personal property may be subject to death taxation by more than one state. Life insurance proceeds payable to a named beneficiary other than the estate are specifically exempt from state death taxes in some states. A decedent-spouse's one-half interest in community property is exempt from state death taxation in most of the community-property states. Many states have adopted the time frame of 3 months from the date of the decedent's death for filing and paying death taxes.Explanation / Answer
Answer:1 True because
An estate tax is a tax imposed by a state or the federal government on the right to transfer property to your heirs after your death.
An inheritance tax is a tax imposed by a state government on the privilege of certain heirs to receive a deceased person's property.
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