Instructions for Form IH-6 "Indiana Inheritance Tax Return" - Indiana

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Download Instructions for Form IH-6 "Indiana Inheritance Tax Return" - Indiana

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Instructions for Completing
Indiana Inheritance Tax Return
This form does not need to be completed for those individuals
Return (Form 706) is not an election on this return. See 45 Ind.
dying after Dec. 31, 2012. For those individuals dying before
Admin. Code 4.1-3-5(b) for an acceptable form for the Indiana
Jan. 1, 2013, this form may need to be completed.
QTIP election. Once made, the QTIP election is irrevocable.
Who Must File
2. Supplemental Documents
You must attach all supplemental documents used to substantiate
The personal representative of the estate of an Indiana resident
the statements contained in the return to the back of the return
must file the inheritance tax return (Form IH-6). If there is no
when you file it. Examples include appraisals, trusts, affidavits,
personal representative, one of the following must file: an heir, a
disclaimers, elections, death certificates, and all other documents
trustee, a joint owner, or another transferee. No filing is required
necessary to complete the audit of the return.
if the total fair market value of the property interests transferred
by the decedent to each transferee under a taxable transfer(s) is
3. Power of Attorney
less than the exemption provided to each transferee. Only one
If the preparer is not a lawyer or a transferee of the decedent’s
return should be filed per decedent.
estate and the personal representative wants the department to
disclose information to the preparer, a completed Form
IH-28,
When to Use This Form
power of attorney, must be provided.
Use this form only if the decedent was a resident of the State of
Indiana at the time of death. For a nonresident decedent, use
4. Dollar Amounts
Form IH-12, available at www.in.gov/dor/3509.htm; contact
Dollar amounts may be rounded to the nearest dollar.
the Indiana Department of Revenue, Inheritance Tax, Indiana
Government Center North, 100 North Senate Ave., Room N248,
5. Fair Market Value
Mail Stop #102, Indianapolis, Indiana, 46204; or call (317) 232-
All property transferred should be valued at the fair market value
2154 for a copy of Form IH-12.
on the date of the decedent’s death except when the alternative
valuation is properly elected, used, and accepted for federal
When to File This Form
estate tax purposes; then the alternative valuation should also
This form must be filed within 9 months of the date of death. If an
be used for inheritance tax. The fair market value is the price to
appropriate probate court determines that, due to an unavoidable
which a willing buyer and a willing seller agree, neither being
delay, the tax cannot be determined within 9 months, the court
under compulsion to buy or sell and both being fully aware of
may extend the period for filing. Without an extension, a penalty
all relevant facts surrounding the exchange. Attach a copy of all
may be assessed by that court for failure to file on time. However,
appraisals or closing statements for such real estate to the return.
an extension will not stop the accrual of interest.
6. Additional Pages
Where to File This Form
If there is not enough space available on any page, continue the
The Inheritance Tax Return must be filed in the probate court of
list on an additional page and attach it immediately after such
the Indiana county in which the decedent was a resident at death
page.
or in the probate court in which the decedent’s estate is being
administered.
General Instructions
Payment
Page One
The resident inheritance tax is to be paid to the county treasurer
You must place the decedent’s Social Security number in box 3.
of the decedent’s county of residence. There is a 5% discount for
payments made within 9 months of the decedent’s date of death.
If the decedent died testate, attach a copy of the will to the return.
Payments made more than 1 year after the date of death accrue
If the decedent died intestate, check the box in item 10.
interest at 10% per year from the date of death until the date of
the payment. If an appropriate probate court determines that, due
Even if no U.S. Estate Tax Return (Form 706) is required to be
to an unavoidable delay, the tax cannot be determined within 12
filed, you must check the appropriate box at item 12. If a Form
months, the court may reduce the interest rate to 6%.
706 is filed with the Internal Revenue Service, you are also
required to file a copy with the Indiana Department of Revenue.
Additional Requirements
Page Two — Inheritance Tax Computation
1. QTIP Election
List all persons, including corporations and other organizations,
If you elect to treat property passing from the decedent as
receiving an interest from the decedent no matter how the transfer
property transferred directly to the surviving spouse for Indiana
took place. Also list the current address of each beneficiary. If
inheritance tax purposes, the election must be made in writing
the space provided is not adequate to list all beneficiaries, attach
and attached to the original return. Electing on the U.S. Estate Tax
additional pages immediately after this page.
1
Instructions for Completing
Indiana Inheritance Tax Return
This form does not need to be completed for those individuals
Return (Form 706) is not an election on this return. See 45 Ind.
dying after Dec. 31, 2012. For those individuals dying before
Admin. Code 4.1-3-5(b) for an acceptable form for the Indiana
Jan. 1, 2013, this form may need to be completed.
QTIP election. Once made, the QTIP election is irrevocable.
Who Must File
2. Supplemental Documents
You must attach all supplemental documents used to substantiate
The personal representative of the estate of an Indiana resident
the statements contained in the return to the back of the return
must file the inheritance tax return (Form IH-6). If there is no
when you file it. Examples include appraisals, trusts, affidavits,
personal representative, one of the following must file: an heir, a
disclaimers, elections, death certificates, and all other documents
trustee, a joint owner, or another transferee. No filing is required
necessary to complete the audit of the return.
if the total fair market value of the property interests transferred
by the decedent to each transferee under a taxable transfer(s) is
3. Power of Attorney
less than the exemption provided to each transferee. Only one
If the preparer is not a lawyer or a transferee of the decedent’s
return should be filed per decedent.
estate and the personal representative wants the department to
disclose information to the preparer, a completed Form
IH-28,
When to Use This Form
power of attorney, must be provided.
Use this form only if the decedent was a resident of the State of
Indiana at the time of death. For a nonresident decedent, use
4. Dollar Amounts
Form IH-12, available at www.in.gov/dor/3509.htm; contact
Dollar amounts may be rounded to the nearest dollar.
the Indiana Department of Revenue, Inheritance Tax, Indiana
Government Center North, 100 North Senate Ave., Room N248,
5. Fair Market Value
Mail Stop #102, Indianapolis, Indiana, 46204; or call (317) 232-
All property transferred should be valued at the fair market value
2154 for a copy of Form IH-12.
on the date of the decedent’s death except when the alternative
valuation is properly elected, used, and accepted for federal
When to File This Form
estate tax purposes; then the alternative valuation should also
This form must be filed within 9 months of the date of death. If an
be used for inheritance tax. The fair market value is the price to
appropriate probate court determines that, due to an unavoidable
which a willing buyer and a willing seller agree, neither being
delay, the tax cannot be determined within 9 months, the court
under compulsion to buy or sell and both being fully aware of
may extend the period for filing. Without an extension, a penalty
all relevant facts surrounding the exchange. Attach a copy of all
may be assessed by that court for failure to file on time. However,
appraisals or closing statements for such real estate to the return.
an extension will not stop the accrual of interest.
6. Additional Pages
Where to File This Form
If there is not enough space available on any page, continue the
The Inheritance Tax Return must be filed in the probate court of
list on an additional page and attach it immediately after such
the Indiana county in which the decedent was a resident at death
page.
or in the probate court in which the decedent’s estate is being
administered.
General Instructions
Payment
Page One
The resident inheritance tax is to be paid to the county treasurer
You must place the decedent’s Social Security number in box 3.
of the decedent’s county of residence. There is a 5% discount for
payments made within 9 months of the decedent’s date of death.
If the decedent died testate, attach a copy of the will to the return.
Payments made more than 1 year after the date of death accrue
If the decedent died intestate, check the box in item 10.
interest at 10% per year from the date of death until the date of
the payment. If an appropriate probate court determines that, due
Even if no U.S. Estate Tax Return (Form 706) is required to be
to an unavoidable delay, the tax cannot be determined within 12
filed, you must check the appropriate box at item 12. If a Form
months, the court may reduce the interest rate to 6%.
706 is filed with the Internal Revenue Service, you are also
required to file a copy with the Indiana Department of Revenue.
Additional Requirements
Page Two — Inheritance Tax Computation
1. QTIP Election
List all persons, including corporations and other organizations,
If you elect to treat property passing from the decedent as
receiving an interest from the decedent no matter how the transfer
property transferred directly to the surviving spouse for Indiana
took place. Also list the current address of each beneficiary. If
inheritance tax purposes, the election must be made in writing
the space provided is not adequate to list all beneficiaries, attach
and attached to the original return. Electing on the U.S. Estate Tax
additional pages immediately after this page.
1
For individuals dying after June 30, 2012, a transfer to a
For dates of death after Dec. 31, 2011, the following exemptions
partnership, a limited partnership, a limited liability partnership,
apply:
an association, a corporation, a limited liability company, a trust,
or a similar entity will be considered a transfer to each individual
1.
Surviving spouse and charitable organizations are 100%
with a beneficial (whether discretionary or not) or ownership
exempt
2. Class A
interest in the entity. Each individual is liable for a percentage of
taxes imposed equal to that individual’s beneficial or ownership
Parents, children, stepchildren, spouse, widow, widower
interest in that entity. List the name and address of the entity
of a child or stepchild (sons-in-law or daughters-in-law),
and each beneficiary or owner of the entity and their respective
grandparents, grandchildren, other lineal ancestors,
percentage of beneficial or ownership interest in the entity. Please
and lineal descendants, and children adopted prior to
contact a professional who is familiar with inheritance tax matters
emancipation ..............................................................$250,000
3. Class B
or the department’s Inheritance Tax Division for clarification on
the taxation of transfers to such entities.
Brothers, sisters, and lineal descendants of brothers or sisters
(blood nieces and nephews) .................................... $500
4. Class C
In the next column list the relationship of the beneficiary to the
decedent. Include enough information to determine the class to
Anyone not listed above including, but not limited to aunts,
which the beneficiary belongs. For example: Lisa Smith, niece,
uncles, cousins, friends, nieces, and nephews by marriage
daughter of decedent’s brother. Also list the entire birth date of
$100
each beneficiary. Failure to completely describe the relationship or
to list the birth date can significantly slow the audit of the return.
Enter in the final column the amount of inheritance tax due
for each beneficiary. Compute the amount of tax due for each
When stating the value of interest each beneficiary is to receive
beneficiary by multiplying that beneficiary’s net taxable interest
(column 3), list the total value of the property interests transferred
(i.e., the total value of interest minus the applicable exemption) by
to each beneficiary.
the appropriate tax rate. The inheritance tax rates are listed in the
following tables.
The amount of each beneficiary’s exemption (column 4) is
determined by the relationship of that beneficiary to the decedent.
Class A
For dates of death after July 1, 1997, but before Jan. 1, 2012, the
Net Taxable Value of
Inheritance Tax
following exemptions apply:
Property Interests
1.
Surviving spouse and charitable organizations are 100%
Transferred
exempt.
$25,000 or less
1% of net taxable value
2. Class A
Over $25,000 but not over
$250 plus 2% of net taxable
Parents, children, grandparents, grandchildren, and other
$50,000
value over $25,000
lineal ancestors and lineal descendants and persons legally
adopted before emancipation ...................................$100,000
Over $50,000 but not over
$750 plus 3% of net taxable
*For deaths after June 30, 2004, stepchildren are Class A.
$200,000
value over $50,000
*For adoptions completed before July 1, 2004, adopted
Over $200,000 but not over
$5,250 plus 4% of net taxable
persons adopted after emancipation are Class A.
$300,000
value over $200,000
3. Class B
Over $300,000 but not over
$9,250 plus 5% of net taxable
Brothers, sisters, lineal descendants of brothers or sisters,
$500,000
value over $300,000
daughters-in-law, and sons-in-law ...........................$500
Over $500,000 but not over
$19,250 plus 6% of net taxable
4. Class C
$700,000
value over $500,000
Anyone not listed above including, but not limited to aunts,
uncles, cousins, friends, nieces, and nephews by marriage
Over $700,000 but not over
$31,250 plus 7% of net taxable
$100
$1,000,000
value over $700,000
Over $1,000,000 but not over
$52,250 plus 8% of net taxable
$1,500,000
value over $1,000,000
Over $1,500,000
$92,250 plus 10% of net
taxable value over $1,500,000
2
Class B
List all mortgages and notes payable to the decedent at the time
of death, with the following information: (1) the face value and
unpaid balance, including interest to the date of death; (2) the
Net Taxable Value of
Inheritance Tax
date of the mortgage or note; (3) the date of maturity; (4) the
Property Interests
name of the maker; and (5) the interest date and interest rates.
Transferred
$100,000 or less
7% of net taxable value
List all stocks and bonds that the decedent owned in his or her
Over $100,000 but not over
$7,000 plus 10% of net taxable
name alone on the date of death. For stocks, describe: (1) the
$500,000
value over $100,000
number of shares; (2) whether common or preferred; (3) the price
per share; (4) the exact name of the corporation; (5) the principal
Over $500,000 but not over
$47,000 plus 12% of net
exchange upon which sold, if listed on any exchange; and (6)
$1,000,000
taxable value over $500,000
the CUSIP number, if available. The price per share is the mean
Over $1,000,000
$107,000 plus 15% of net
between the highest and lowest selling prices quoted on the date
taxable value over $1,000,000
of the decedent’s death. For bonds, describe: (1) quantity and
denomination; (2) number of the obligor; (3) date of maturity;
Class C
(4) interest rate; (5) interest due date; (6) principal exchange, if
listed on an exchange; and (7) CUSIP number, if available. List the
Net Taxable Value of
Inheritance Tax
interest and any dividends for each separately.
Property Interests
Transferred
List any life insurance policies on the decedent’s life that were
$100,000 or less
10% of net taxable value
payable to the decedent’s estate. Enclose a copy of Form 712 with
the return.
Over $100,000 but not over
$10,000 plus 15% of net
$1,000,000
taxable value over $100,000
List on this schedule any contract by the decedent to sell real
Over $1,000,000
$145,000 plus 20% of net
estate. List the name of the purchaser, the date of the contract, a
taxable value over $1,000,000
brief description of the real estate, the selling price, interest rates,
and the unpaid balance of principal and interest at the time of
Page Three — Schedule A — Real Estate
the decedent’ death. Include a copy of the contract with the filed
List every parcel of Indiana real property in which the decedent
return.
had any right, title, or interest at the time of death and which was
transferred at death by will or by intestate succession. Include real
Page Five — Schedule C — Other Miscellaneous
property that the decedent was buying on contract at the time
Property Transferred by Will or Intestate Law
of death. Do not include real property held jointly with rights of
survivorship with one or more persons, real property held by the
Schedule C is a catchall. All other personal property, either
entireties, real property held in a trust, or real property that the
tangible or intangible, that the decedent owned individually at the
decedent was selling on contract on this page because it will be
time of death and that is transferred by will or intestate succession
reported on other schedules.
at death is to be listed here, including but not limited to:
Describe the property in enough detail so that it can be identified
Household goods
for valuation. Example: If the will refers to the property as
Automobiles
“the Smith Farm, ” that land should be listed as “the Smith
Works of art
Farm” followed by its legal description on Schedule A. If the
Books
real property is transferred in two or more parcels to different
Silverware
transferees, each parcel should be separately valued on this
Growing crops
schedule. To assist in auditing the return, include the parcel
All partnership and unincorporated business interests may
number along with the real estate description and address.
have in the estate or trust
Any beneficial interest decedent of another
Page Four — Schedule B — Cash, Deposits,
Clothing
Mortgages, Notes, Stocks and Bonds, Life
Jewelry
Insurance Payable to the Estate
Boats
Livestock
List all of the monies that the decedent owned in his or her name
Farm machinery
alone, whether in his or her immediate possession or standing in
Royalty interests
his or her credit in any holding institution no matter where that is
Any refunds due the decedent at death or because of death
located. List the name of the holding institution, type of account
Any other property interest that the decedent solely owned
(i.e., savings, checking, certificate of deposit, money market, etc.),
and that are not listed on the two preceding schedules
account number, amount in the
account,
and any interest that
accrued at the decedent’s death.
3
4. Transfers Intended to Take Effect in Possession or Enjoyment
This schedule does not include property the decedent owned
at or after Death
jointly or that was transferred by some means other than by
will or by intestate succession (for example, by beneficiary
List all property transferred by the decedent for less than
designation).
full consideration if the transferee did not receive full
possession and enjoyment of such property until at or after
Page Six — Schedule D — Annuities, Pensions,
the decedent’s death. This includes property the decedent
transferred subject to a retained life estate. You must value
Retirement Plans, and Other Death Benefits
such property at full fair market value at the time of the
decedent’s death. Example 1: John deeds his farm to Mary
List all annuities, pensions, retirement plans, and other death
and Sam in 1970, retaining a life estate in the property. In
benefits to which the decedent had a right at his or her death.
2012,
when John dies, the full fair market value of the farm
Identify the payee or beneficiary of each annuity or pension plan.
is included in John’s estate for inheritance tax purposes.
To calculate the present value of installment payments, use the
Example 2: John opens a bank account designating Mary as
Oct. 1, 1988, unisex 10% actuarial tables.
the beneficiary of such bank account at his death.
Page Seven — Schedule E — Transfers Other than
5. Transfer on Death or Payable on Death
by Will or Intestate Law
List all property, real or personal, which is designated as
“transfer on death” (TOD) or “payable on death” (POD) at
Any transfer of property interest from the decedent to a transferee
the fair market date of death value.
that is completed at death and is not transferred by will or by
intestate succession should be listed on this schedule:
6. Joint Tenancies with Rights of Survivorship
All property, whether real or personal, in which the decedent
1. Trust
held an interest at the time of death as a joint tenant with
Assets the decedent transferred into a trust prior to death
rights of survivorship must be entered on this schedule.
may be subject to the Indiana Inheritance Tax. List every
Describe the joint property and list the names of the joint
asset of the decedent’s trust on this schedule. Include all
tenants.
Indiana property held in the trust but not out-of-state real
property. These assets are to be valued at their fair market
Include the full fair market value of the jointly owned
value on the date of the decedent’s death or on the alternative
property on Schedule E. If you believe that less than the full
valuation date if properly elected on Form 706 and accepted
value of the entire property is includible for tax purposes, you
by the IRS. Include a copy of the instrument creating the trust
must establish your right to exclude part of the value. Enclose
with the return.
any documentation that might substantiate the use of the
lesser value with the return.
2. Power of Appointment
List all property interests that are transferred at the decedent’s
Page Eight — Schedule F — Deductions
death by the decedent’s exercise of any power of appointment
or by the decedent’s failure to exercise such power vested
All lawful claims against the decedent’s estate and necessary
in him or her. Include a brief statement of the source of the
costs of administering the estate may be deducted from the
power, and include a copy of the instrument with the return.
value of property interests transferred by the decedent by will, by
intestate law, or by trust. If the value of the deductions exceeds the
3. Transfers in Contemplation of Death
property interest transferred by will, by intestate law, and by trust,
List all transfers of real or personal property the decedent
the remaining value may be deducted from property interests
made by deed, gift, or bargain sale in contemplation of death.
transferred by other means providing these expenses are actually
Also list all transfers within one year prior to death. Indicate
paid from those
assets.
the date of each transfer, the name of each transferee, the type
of property interest transferred, and the fair market value of
The following items may be deductible:
the property interest transferred as of the date of transfer.
Decedent’s funeral expenses
Reasonable attorney fees, personal representative fees, and
Transfers within the year preceding death are presumed to
trustee fees for administration of property subject to Indiana
have been made in contemplation of the death. However,
Inheritance Tax
this presumption is rebuttable. To rebut the presumption,
Lawful debts the decedent died owing
set forth all facts necessary for a proper determination of the
Amounts, not to exceed $1,000, paid for a memorial for
taxability of such
transfers.
Include supporting documents
decedent
with the return.
The amount of any allowance paid to decedent’s spouse or
family pursuant to Ind. Code 29-1-4-1
Taxes on the decedent’s real property that is subject to the
Indiana Inheritance Tax, if the taxes were a lien on the real
property at the time of the decedent’s death
4
Taxes on the decedent’s personal property that is subject to
the Indiana Inheritance Tax if such taxes were due and owing
at the time of the decedent’s death
Unpaid individual income taxes, both federal and state, on
the decedent’s income to date of death
Inheritance, estate, or transfer taxes imposed by other states
with respect to property that is also subject to the Indiana
Inheritance Tax. This does not include any federal estate tax
or fiduciary income taxes
Any mortgage that is a lien against real property that is
subject to Indiana Inheritance Tax
Nondeductible items include, but are not limited to, the following:
Fiduciary income taxes
Funeral flowers
Federal estate tax
Estimated selling expenses of unsold real estate
Expenses connected with property not subject to Indiana
Inheritance Tax
Funeral dinners
Traveling expenses for beneficiaries, or others, to attend the
decedent’s funeral
Income tax incurred by the estate or beneficiaries upon
liquidating or receiving estate property (for instance, income
tax on an annuity or a retirement account)
Indiana Inheritance Tax incurred as a result of a decedent’s
death
5
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