Chapter C. FEDERAL AND STATE ESTATE TAXES

• Jurisdiction: Washington

C. FEDERAL AND STATE ESTATE TAXES

1. General Instructions.

(a) Federal Estate Tax. A United States Estate (and Generation-Skipping Transfer) Tax Return (IRS Form 706) must be filed if the gross value of the estate exceeds the applicable exclusion amount for the calendar year that includes the date of death. The value of the estate is the sum of the decedent's one-half gross community property plus the decedent's gross separate property, if any. If the decedent's total estate is less than the applicable exclusion amount, no U.S. Estate Tax Return need be filed.

The applicable exclusion amount for 2009 is $3,500,000. (When this book was printed, an executed amendment to the applicable exclusion amount for 2010 and subsequent years had not been enacted.)

If the U.S. Estate Tax Return cannot be filed on or before nine months from the date of death, a request for extension of time to file should be made on IRS Form 4768. An automatic six-month extension will be granted if the form is filed. If federal estate tax will be payable but liquid assets are not available to pay the tax, the same IRS Form 4768 is used to request an extension of time to pay the tax. The instructions for Form 4768 should be reviewed for the requirements for completing and filing the form.

(b) Washington Estate Tax. A Washington State Estate and Transfer Tax Return must be filed if the gross value of the estate exceeds $2,000,000. If the value of the decedent's total estate is less than $2,000,000, no Washington state estate tax return must be filed.

(i) Federal Return Required. If a federal estate tax return is filed, the Washington State Estate and Transfer Tax Return to be completed and filed is Form REV 85 0049e. (See Furnished Form 15.C.4(b).) A complete copy of the signed IRS Form 706 or 706NA, together with all supporting documentation, must be attached to this return. If a request for an extension of time to file the federal estate tax return is being made, the time to file the Washington estate tax return will be extended if a copy of the IRS Form 4768, with payment (if applicable), is mailed to the Washington Department of Revenue. Upon receipt of the U.S. Estate Tax Closing Letter from the IRS, a copy should be sent to the Department of Revenue, whereupon an Estate Tax Release will be returned directly to the taxpayer.

(ii) No Federal Return Required. If a federal estate tax return is not required to be filed, a different form, REV 85 0046, is to be completed and filed if the gross estate is $2,000,000 or greater. (See Furnished Form 15.C.4(c).) If the Washington estate tax return cannot be filed on or before nine months after the date of death, a request for extension of time to file should be made on Application for Extension of Time to File a Washington State Estate and Transfer Tax Return, Form REV 85 0048. (See Furnished Form 15.C.4(d).)

(c) Other State Estate or Inheritance Tax Returns. If the decedent owns real property in another state, it may be necessary to file an estate or inheritance tax return in that state.

15.C.2 Procedure Checklist. United...