Internal Revenue Service
Revenue Ruling

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 Rev. Rul. 60-88

1960-1 C.B. 365

IRS Headnote

Full credit will be allowed against the Federal estate tax, subject to the overall limitations of section 2011 of the Internal Revenue Code of 1954 as to amount, for the payments of death taxes imposed upon an estate by two states of the United States, where each of the taxing agencies claims jurisdiction upon the basis of domicile.

Mimeograph 3971, C.B. X1-2, 427 (1932), amplified.

Full Text

Rev. Rul. 60-88

Advice has been requested concerning the credit against the Federal estate tax for death taxes imposed upon an estate by two states of the United States, where each of the taxing agencies claims jurisdiction upon the basis of domicile.

Upon death of the decedent, two states claimed jurisdiction to tax the entire estate upon the basis of domicile. The tax statutes of each state provide for an amount equal to the credit provided for by section 2011 of the Internal Revenue Code of 1954.

There is a possibility of a compromise on the part of the executors of the estate with representatives of the two states whereby the total amount of the death taxes payable to each state will not exceed the amount available to the estate as a credit against its Federal estate tax. This amount will be allocated between the two states in such proportions as may be mutually agreed upon. Also, both states will agree, as part of the compromise, to take steps necessary to establish that the decedent was domiciled in only one of the two states.

Section 2011 of the Code provides that Federal taxes imposed upon an estate shall be credited with the amount of any estate, inheritance, legacy, or succession taxes actually paid to any state or territory or the District of Columbia, in respect of any property included in the gross estate.

Mimeograph 3971, C.B. XI-2, 427 (1932), holds that no credit will be allowed the estate of a decedent for state death taxes paid after January 4, 1932, with respect to intangible property, to a state other than that of the decedent's domicile. Since the publication of the Mimeograph, however, the Supreme Court of the United States has indicated that jurisdictional bases other than that of place of domicile will support a death tax upon intangibles. See, for example, State Tax Commissioner of Utah v. Aldrich et al., Administrators , 316 U.S. 174. Moreover, it appears that taxpayers will encounter difficulty in getting the Supreme Court to arbitrate conflicting state claims of jurisdiction to tax intangibles based upon domicile.

It is the policy of the Internal Revenue Service generally not to question the application of state death tax statutes or to intervene in controversies regarding their application. The situation described in Revenue Ruling 56-230, C.B. 1956-1, 660, can be distinguished in that a state not the domicile of the decedent was there attempting indirectly (through the measure of the tax levied upon property located within the state) to tax intangibles of the decedent located outside the state, in contravention of rules laid down by the Supreme Court. In other words, the jurisdictional basis upon which the state was attempting to tax the intangibles was not one recognized by the Supreme Court. Here, the jurisdictional basis is good-there is only the question of fact as to which state is the decedent's domicile.

Accordingly, in the instant case, a credit will be allowed for the amount paid to each state, up to the maximum total credit permitted by section 2011 of the Code. The fact that a compromise agreement is effected among the interested parties as to the amount of tax liability to each state, and under which one of the states is designated as the decedent's domicile, will not alter this result.

Mimeograph 3971, C.B. XI-2, 427 (1932), is hereby amplified to permit credit of state death taxes upon intangibles paid to more than one state, where each state asserts jurisdiction to tax based upon domicile.