Qualified decedents' estate tax.

• Author: Laffie, Lesli S.

Rev. Rul. 2002-86 explains how an estate of a "qualified decedent" (as defined in Sec. 2201(b)) computes Federal estate tax under Sec. 2201, as amended by the Victims of Terrorism Tax Relief Act of 2001. (For more information, see DiRe, et al., "New Law Offers Relief to Terrorist Attack Victims," TTA, May 2002, p. 313.)

In each of three scenarios, D, a resident of state X, is a qualified decedent. D did not make any adjusted taxable gifts (as defined in Sec. 2001 (b)) during life. In filing Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return, D's executor does not elect out of Sec. 2201(a). D's estate pays the X death tax.

In the first situation, D died in 2001, a year in which X imposed a state death tax equal to the state death tax credit allowable under Sec. 2011 (a); D's taxable estate is $2,936,818. The facts are the same in situation 2, except that D's taxable estate is $8,762,500.

In situation 3, D dies in 2005, a year in which X imposes a state death tax equal to the state death tax credit that would have been allowable under Sec. 2011 (a) before the enactment of the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA). D's taxable estate before the deduction for state death taxes is $5,953,939.

Under Rev. Rul. 2002-86, D's estate will have no Federal estate tax liability...