830 CMR: DEPARTMENT OF REVENUE
830 CMR 65C:00: MASSACHUSETTS ESTATE TAX
830 CMR 65C.00 is amended by adding the following section:
830 CMR 65C.1.1: Administrative Provisions for Estate Tax

(1) General. This regulation, 830 CMR 65C.1.1, applies to estates of decedents dying on or after January 1, 1986, and does not apply to estates of decedents dying before January 1, 1986. Chapter 711 of the Acts of 1985 substantially revised the Massachusetts estate tax law. This regulation, 830 CMR 65C.1.1, explains the provisions of the estate tax law, M.G.L. c. 65C, as amended.

The Massachusetts estate tax is a transfer tax imposed on the value of all property in the estate of a decedent at the date of death. It applies to estates of decedents who are Massachusetts residents at the date of death. It also applies to estates of nonresident decedents who own real and tangible personal property located in Massachusetts at the date of death and estates of decedents domiciled outside of the United States who own real, tangible, or intangible property located in Massachusetts at the date of death.

The Massachusetts estate tax generally is based upon the United States Internal Revenue Code (Code), as amended and in effect on January 1, 1975. Later amendments to the federal estate tax law do not apply, except where federal provisions are specifically incorporated by M.G.L. c. 65C.

(2) Definitions. For the purposes of this regulation, 830 CMR 65C.1.1, and other Massachusetts estate tax regulations, unless the context requires otherwise, the following definitions apply:

Alternate Valuation, the value of all property included in a decedents gross estate at the alternate valuation date, which in general is six months after the date of decedent's death. For an explanation of alternate valuation, see 830 CMR 65C.2.1(7)(b).

Commissioner, the Commissioner of Revenue or any person duly authorized to act on the Commissioner's behalf'.

Domicile, the place which is an individuals true, fixed and permanent home, determined by established common law principles, and the facts and circumstances in each case.

Estate Tax Credit, a credit of $1500, or the amount of the Massachusetts estate tax liability computed on the Massachusetts taxable estate, whichever is less.

Estate Tax Exemption if the Massachusetts net estate is $200,000 or less there is an exemption equal to the Massachusetts net estate; but if the Massachusetts net estate is greater than $200,000, there is no exemption.

Estate Tax Lien, a Massachusetts estate tax lien on all property included in the Massachusetts gross estate, which arises by operation of law at the date of death of every Massachusetts decedent and every non-resident decedent who owns real estate or tangible personal property located in Massachusetts.

Executor, the person named in a will and appointed by a probate court to execute the provisions of a decedent's will; the administrator appointed by a probate court to settle an estate; or if there is no executor or administrator appointed, any person in actual or constructive possession of any property of a decedent and charged with filing the decedent's estate tax return and paying the tax.

Fair market value, the price at which property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell, and both having reasonable knowledge of all of the relevant facts.

Federal Gross Estate, the gross estate as defined under the 1975 Code, except that:

(a) notwithstanding section 2035 of the Code, the federal gross estate includes the value of all property in which the decedent had an interest and of which the decedent made a transfer, by trust or otherwise, within three years of death, except where

1. the decedent made a bona fide sale of property for adequate and full consideration, or

2. the decedent transferred to any person during a calendar year property which has a total value of $10,000 or less; and

(b) notwithstanding section 2040 of the Code, the federal gross estate includes one-half of the value of any property held by the decedent and spouse as joint tenants or as tenants by the entirety, where the decedent and spouse are the only joint tenants.

General Power of Appointment, a power to consume, invade or appropriate property which is a general power of appointment as defined under section 2041 of the Code.

Intangible Property, property which has no intrinsic and marketable value in itself, but represents value. Examples of intangible property include bank accounts, bonds, cash, leaseholds, mortgages, notes, and stocks.

Limitation on Amount of Massachusetts Estate Tax (20 Percent Provision), the statutory rule which provides that the Massachusetts estate tax liability is not more than 20 percent of the amount by which the Massachusetts net estate exceeds $200,000.

Massachusetts Adjusted Gross Estate, the Massachusetts net estate less administrative expenses, expenses incurred in administering property not subject to claims, and net losses.

Massachusetts Gross Estate, the federal gross estate, whether or not a federal estate tax return is required to be filed, plus the value of any qualified terminable interest property (QTIP) for which a Massachusetts marital deduction was allowed in the estate of the first spouse to die, and reduced by the value of

(a) real and tangible personal property located outside Massachusetts, and

(b) property subject to general powers of appointment on which inheritance taxes under M.G.L. c. 65, § 14 and St. 1975, c. 684, § 83, have been settled and paid.

For an explanation of the Massachusetts gross estate, see 830 CMR 65C.2.1.

Massachusetts Net Estate, the Massachusetts gross estate less deductions allowed for funeral expenses, claims against the estate, and unpaid mortgages or liens on property included in the Massachusetts gross estate.

Massachusetts Taxable Estate, the Massachusetts adjusted gross estate less the charitable deduction and marital deduction.

1975 Code (or Code), the Internal Revenue Code of the United States, as amended and in effect on January 1, 1975, unless the text of this regulation, 830 CMR 65C.1.1, or other Massachusetts estate tax regulations, indicates otherwise.

1985 Code, the Internal Revenue Code of the United States, as amended and in effect on January 1, 1985.

1975 Treasury Regulations (Treas. Reg. (1975)), Treasury Regulations of the United States, interpreting the 1975 Code, unless the text of this regulation, 830 CMR 65C.1.1, or other Massachusetts estate tax regulations, indicates otherwise.

1985 Treasury Regulations (Treas. Reg. (1985)), Treasury Regulations of the United States, interpreting the 1985 Code.

Non-resident Decedent, a person whose domicile at the date of death is outside Massachusetts.

Protective Election, an election timely filed by an executor in order to preserve the right of a decedent's estate to elect special use valuation for qualified farm property. This protective election is contingent upon the estate's meeting the requirements of section 2032A of the 1985 Code.

Qualified Real Property, real property which is located in Massachusetts and used for farming purposes, and for which an executor has made a proper election for special use valuation. Qualified real property includes qualified replacement property and qualified exchange property, within the meaning of section 2032A of the 1985 Code.

Qualified Terminable Interest Property (QTIP), for Massachusetts estate tax purposes, QTIP property is property

(a) which is included in a decedent's Massachusetts gross estate,

(b) which passes from the decedent to a surviving spouse,

(c) in which the surviving spouse has a qualifying income interest for life, and

(d) for which an election is made to qualify the property for the Massachusetts marital deduction.

For an explanation of QTIP property, see 830 CMR 65C.2.1(5).

Qualifying Income Interest for Life, a property interest where

(a) all of the income from the property is payable to a surviving spouse annually or more frequently, and

(b) during the surviving spouse's lifetime no person has a power to appoint any part of this property to any person other than the surviving spouse.

Resident Decedent, a person whose domicile at the date of death is in Massachusetts.

Special Use Valuation, the value of qualified real property located in Massachusetts and used for farming purposes, based on its actual use as a farm, and for which an executor has made a proper election under M.G.L. c. 65C, § 5(c). For an explanation of special use valuation, see 830 CMR 65C.2.1(7)(c).

Tangible Personal Property, property which is necessarily corporeal, has a visible presence, and has a value of its own. Examples of tangible personal property include antiques, art, boats, cars, coins, jewelry, livestock, silver, and stamps.

Valuation, the value of all property is included in the Massachusetts gross estate at its fair market value at the date of death of a decedent, except when alternate valuation or special use valuation is elected.

(3) 1975 Internal Revenue Code incorporated.

(a) General rule. The Massachusetts estate tax law, M.G.L. c. 65C, as amended, and applicable to estates of decedents dying on or after January 1, 1986, incorporates sections 2031 through 2051 and 2053 through 2056 of the 1975 Code. Later amendments to the federal estate tax law do not apply to the Massachusetts estate tax law, except when specifically authorized by M.G.L. c. 65C.

(b) Exceptions to the general rule incorporating 1975 Code. In the following areas the Massachusetts estate tax law does not incorporate the provisions of the 1975 code, but either incorporates or adopts with modifications later amendments to the Code.

1. Alternate valuation. Section 2032 of the 1985 Code is incorporated. Alternate valuation may be elected for Massachusetts estate tax purposes if no federal estate tax is required to be paid, whether or not a federal estate tax return is required to be filed. For an explanation of alternate valuation, see 830 CMR 65C.2.1(7)(b).

2. Special use valuation. Section 2032A of the 1985 Code is incorporated for farm property located in Massachusetts. Special use valuation may be elected for qualified real property which is used for farming purposes and is included in a decedent's Massachusetts gross estate. For an explanation of special use valuation, see 830 CMR 65C.2.1(7)(c).

3. Property transferred by decedent within three years of death. Notwithstanding section 2035 of the 1975 Code, a decedent's Massachusetts gross estate includes the value of property transferred by a decedent within three years of the date of death. For an explanation of property transferred by a decedent within three years of death, see 830 CMR 65C.2.1(3).

4. Property owned jointly by decedent and spouse. Notwithstanding section 2040 of the 1975 Code, a decedent's Massachusetts gross estate includes one-half of the value of property owned jointly by a decedent and spouse. For an explanation of property owned jointly by a decedent and spouse, see 830 CMR 65C.2.1(4).

5. QTIP property included in gross estate. Section 2044 of the 1985 Code is adopted for property included in a decedent's Massachusetts gross estate. QTIP property is included in the Massachusetts gross estate of a surviving spouse when a Massachusetts marital deduction was allowed for this QTIP property in the estate of the first spouse to die. See 830 CMR 65C.2.1(5).

6. Reformation of charitable instruments. Subsection 2055(e) of the 1985 Code is incorporated. Reformation of a charitable instrument is allowed in order to qualify the instrument for a Massachusetts charitable deduction.

7. QTIP property election for marital deduction. Subsection 2056(b)(7) of the 1985 Code is adopted for property included in a decedent's Massachusetts gross estate. QTIP property may be elected for the Massachusetts marital deduction.

(4) 1975 Treasury regulations incorporated.

(a) General rule. The Massachusetts estate tax law, M.G.L. c. 65C, as amended, and applicable to estates of decedents dying on or after January 1, 1986, incorporates sections 20.2031 through 20.2051 and 20.2053 through 20.2056 of the Treasury regulations interpreting the 1975 Code.

(b) Exceptions to the general rule incorporating 1975 Treasury regulations. In the following areas the Massachusetts estate tax law does not incorporate the 1975 Treasury regulations, but does adopt the enumerated sections of the Treasury regulations interpreting the 1985 Code.

1. Valuation of annuities and other partial interests. Treas. Reg. § 20.2031-7 (1985) is incorporated for estates of decedents dying on or after January 1, 1986 through April 30, 1989. At a decedent's date of death the 10 percent unisex actuarial tables are used for the valuation of annuities and other partial interests. Thereafter the federal actuarial tables in effect at a decedent's date of death are used for the valuation of annuities and other partial interests.

2. Special use valuation. Treas. Reg. § 20.2032A (1985) is incorporated for farm property located in Massachusetts. Special use valuation may be elected for farm property included in a decedent's Massachusetts gross estate. For an explanation of special use valuation, see 830 CMR 65C.2.1(7)(c).

3. QTIP property election for marital deduction. Temporary Treas. Reg. § 22.2056-1 (1985) is adopted for property included in a decedent's Massachusetts gross estate. QTIP property may be elected for the Massachusetts marital deduction.

4. Alternate valuation. Treas. Reg. § 20.2032-1(b) 1975) is not incorporated. For an explanation of alternate valuation, see 830 CMR 65C.2.1(7)(b).

5. Transactions in contemplation of death. Treas. Reg. § 20.2035 (1975) is not incorporated. For an explanation of property transferred within three years of a decedent's death, see 830 CMR 65C.2.1(3).

6. Valuation of charitable interests. Treas. Reg. § 20.2055-2(f) (1975) is not incorporated. The valuation of charitable interests is determined by the federal actuarial tables in effect at a decedent's date of death.

7. Limited reformation of charitable instruments. Treas. Reg. § 20.2055-4 (1975) is not incorporated. Reformation of a charitable instrument is allowed in order to qualify the instrument for a Massachusetts charitable deduction.

(5) Imposition of Massachusetts estate tax.

(a) General rule. The Massachusetts estate tax is a transfer tax imposed on the transfer of the Massachusetts taxable estate of every resident decedent and on the transfer of real or tangible personal property located in Massachusetts of every nonresident decedent.

(b) Filing requirements.

1. Massachusetts Estate Tax Return (Form M-706). An executor must tile a Massachusetts Estate Tax Return (Form M-706) for the estate of every resident decedent whose Massachusetts gross estate is over $200,000 at the date of death, and every non-resident decedent who owns real or tangible personal property located in Massachusetts and whose Massachusetts gross estate, return, even if the decedent's Massachusetts gross estate is less than $200,000, in order to obtain a Massachusetts Release of Estate Tax Lien (Form M-792) on Massachusetts real estate or a Massachusetts Estate Tax Closing Letter (Form M.E.C.L.).

2. Massachusetts Non-Resident Affidavit (Form M-NRA). An executor for the estate of a non-resident decedent or a decedent domiciled outside of the United States must file, in addition to the Massachusetts Estate Tax Return (Form M-706), the Massachusetts Non-Resident Affidavit (Form M-NRA). This affidavit is used to compute the tax for a non-resident decedent and to furnish facts about a decedent's domicile at the date of death. The determination of domicile depends on the facts and circumstances of each case.

3. Additional documents to be filed. In addition to the Massachusetts estate tax return (and Massachusetts non-resident affidavit for a non-resident decedent), where applicable an executor of a decedent's estate must file the following documents:

a. Massachusetts documents.

i. Probate documents. An executor must file with the Massachusetts estate tax return an attested copy of a decedent's will, if any, and an attested copy of the petition for probate or administration listing the heirs at law. An attested copy is one which the Registrar of Probate, or the executor or other authorized representative has signed under penalties of perjury, affirming that the document is a true copy of an original document filed with and allowed by the appropriate probate court. See M.G.L. c. 65, § 25.

ii. Certificate Releasing Massachusetts Estate Tax Lien (Form M-792). To obtain a release of Massachusetts estate tax lien on real estate located in Massachusetts in which a decedent had an interest at date of death, the executor must file with the Massachusetts estate tax return three completed copies of the Certificate Releasing Massachusetts Estate Tax Lien (Form M-792), a copy of the recorded deed or certificate of title which created the decedent's ownership for each parcel of real estate, and a completed copy of a purchase and sale agreement or mortgage commitment letter, if any.

iii. Special Use Valuation Election (Form M-706N). If an executor of a decedent's estate elects special use valuation for farm property located in Massachusetts, the executor must file a Massachusetts Special Use Valuation Election (Form M-706N) and related documents. For an explanation of special use valuation, see 830 CMR 65C.2.1(7)(c).

iv. Power of Attorney (Form M-706 or Form M-2848). An executor must complete the Power of Attorney section on Form M-706, page 1 (or Power of Attorney Form M-2848) to authorize an attorney or other representative to receive confidential tax information and act on behalf of a decedent's estate.

v. Previous Massachusetts filings. If an executor of a decedent's estate previously filed any estate tax document, such as an extension of time to file the return or to pay the Massachusetts estate tax (Form M-4768 or M-4768A) or an application for certificate releasing Massachusetts estate tax lien (Form M-4422), the executor must file a copy of the previous filing with the completed Massachusetts estate tax return.

b. Federal documents.

i. Federal Estate Tax Return (Form 706). If a decedent's estate is required to file a federal return for federal estate tax purposes, the executor must file with the Massachusetts Estate Tax Return (Form M-706) a signed and dated copy of the decedent's federal Estate Tax Return (Form 706) with attached documents.

ii. Federal Gift Tax Return (Form 709). If a decedent made any gift of property within three years of death for which a gift tax return was filed, the executor must file with the Massachusetts estate tax return a signed and dated copy of the federal Gift Tax Return or Returns (Form 709).

iii. Life Insurance Form (Form 712 or 938). If a decedent had any incidents of ownership in a life insurance policy on the decedent's life, the executor must file for each policy a copy of federal Form 712, which is obtained from the insurance company issuing the policy. For life insurance on another's life which was owned by the decedent, the executor must file federal Form 938, obtained from the insurance company.

c. Other relevant documents. Where applicable, an executor may be required to file other relevant documents with a Massachusetts estate tax return, including but not limited to the following:

i. Affidavit of contribution. If a decedent held property jointly with another person (except for property held jointly with only a surviving spouse) and less than the full value of that property is included in the decedent's Massachusetts gross estate, the executor must file an affidavit of contribution, signed under penalties of perjury by the surviving joint owner or owners, with supporting evidence (e.g., income tax returns, social security statements).

ii. Financial statements. If a decedent at date of death owned an interest in a business which is not publicly traded (e.g., closely held corporation, sole proprietorship), for each business interest the executor must submit financial statements, including balance sheets, income statements, and corporate tax returns for the five preceding years; and copies of appraisals, if any.

iii. Trust instruments. If a decedent transferred property to a trust or had a beneficial interest or a power of appointment in a trust, the executor must submit a copy of the trust instrument.

iv. Pension or annuity plans. If a decedent was receiving or was entitled to receive a pension or annuity under a plan described in section 2039 of the Code, or if a decedent's death caused any beneficiary to receive such a pension or annuity, the executor must file a copy of the pension or annuity plan. For a qualified pension or annuity plan, the executor must file the letter of determination of qualification from the Internal Revenue Service with the computation of the amount of the pension or annuity included in the decedent's Massachusetts gross estate. In general, governmental pensions (federal, state and city) are qualified plans and no letter of qualification is necessary.

v. Expert appraisals. If a decedent at date of death owned real estate in Massachusetts, the Commissioner may require that the executor file a real estate appraisal by an expert to substantiate the fair market value. If a decedent at date of death owned tangible property (e.g., antiques, boats, cars, coins, jewelry, paintings, silver, stamps) where the value of one item is more than $3,000 or any collection of similar items is more than $10,000, the executor must file a copy of the federal determination of value, if any. If there is no federal valuation, the Commissioner may require that the executor file an appraisal by an expert. See Treas. Reg. § 20.2031-6.

d. Documents to be filed after return.

i. Federal final determination letter and federal changes, if any. An executor must file a copy of the final determination of federal estate tax and a copy of federal changes to the federal taxable estate, if any, within two months of receipt of the final determination.

ii. Massachusetts Report of Federal Estate Tax Change (Form M-706FC). An executor must file with the final determination of federal estate tax change a Massachusetts Report of Federal Estate Tax Change (Form M-706FC) within two months of receipt of the final determination. The executor must compute any change in the Massachusetts estate tax and pay any additional tax, plus interest, with the filing of the report of federal change. See also M.G.L. c. 62C, § 30, and regulation on federal changes, 830 CMR 62C.30.1.

iii. Massachusetts Fiduciary Income Tax Return (Form 2). If an executor of a decedent's estate is required to file a Massachusetts estate tax return and the estate earned gross income over $100 beginning on the day after the decedent's date of death, the executor must report that income on a Massachusetts Fiduciary Income Tax Return (Form 2). Form 2 generally must be filed on April 15 of the next taxable year. See Form 2 instructions.

iv. Amended Massachusetts Estate Tax Return (Form R-706). If an executor of a decedent's estate is covers additional property to be included in a decedent's Massachusetts gross estate after filing a Massachusetts estate tax return, the executor must report that property to the Commissioner immediately upon discovery. The executor must file an amended Massachusetts Estate Tax Return (Form M-706) with the words "AMENDED RETURN" clearly noted at the top of the first page and the changes from the original return clearly noted on the appropriate schedules. If more than 25% of the total assets are omitted from a decedent's estate, the Commissioner's time to assess the Massachusetts estate tax is extended. See M.G.L. 62C, § 27(f).

4. Record Retention. An executor of a decedent's estate must keep complete records for three years after the due date for filing the Massachusetts estate tax return, or the date the return was actually filed, whichever is later. The executor must furnish all relevant information to the Commissioner upon request. See also M.G.L. c. 65C, § 8, and regulation on record retention, 830 CMR 62C.25.1.

(c) Time for filing a Massachusetts estate tax return.

1. General rule. An executor must file a Massachusetts estate Tax Return (Form M-706), accompanied by a filing fee, within nine months after the date of a decedent's death, unless an extension of time to file is granted.

2. Extension of time to file. The Commissioner for good cause may grant an extension of time to file an estate tax return for a reasonable period, up to six months. In order to obtain an extension of time to file, an executor must comply with the following requirements:

a. Application for extension to file. The executor must sign and file an Application for Extension of Time to File (Form M-4768) on or before the due date of the return, or before the expiration of a previously granted extension, providing facts to show good cause why the return cannot be timely filed.

b. Timely payment of tax. The executor must pay the amount of tax estimated to be due with the application for extension of time to file. If the executor fails to pay 80% of the estate tax which is finally determined to be due, on or before the due date for payment of the tax, the extension of time to file is void and the estate is subject to a penalty for a late return.

c. Timely filed estate tax return. The executor must file a completed Estate Tax Return (Form M-706), with a copy of the extension of time to file approved by the Commissioner, within the time granted by the extension. If the estate tax return is not timely filed within the extension of time granted, the estate is subject to a penalty for a late return.

(d) Time for payment of Massachusetts estate tax.

1. General rule. An executor must pay the Massachusetts estate tax within nine months after the date of a decedent's death, unless an extension of time to pay is granted. Checks are payable to the Commonwealth of Massachusetts.

2. Extension of time for payment. The Commissioner for good cause may grant an extension of time for payment of the estate tax for a reasonable period, not to exceed six months. If payment of the tax will result in undue hardship for the estate, however, the Commissioner may extend the time for payment for a reasonable period, not to exceed three years. In order to obtain an extension of time for payment, an executor must comply with the following requirements:

a. Application for extension of time to pay. The executor must sign and file an Application for Extension of Time to Pay (Form M-4768A) on or before the due date for payment of the estate tax, providing facts to show good cause why the estate tax cannot be timely paid.

b. Timely payment of tax. The executor must pay the estate tax within the extension of time granted. Interest on any unpaid tax accrues from the original due date for payment of the tax. If the executor fails to pay the tax on or before the due date for payment of the tax, including any extension granted, the estate is subject to a penalty for late payment.

c. Undue hardship. If the executor furnishes facts hat the payment of tax will result in undue hardship for the estate, the Commissioner may require bonds or other sureties to secure adequate payment of the tax before granting the extension of time to pay.

(6) Computation of the Massachusetts estate tax.

(a) General rule. The Massachusetts estate tax is computed on the Massachusetts taxable estate of a decedent. A decedent's Massachusetts taxable estate is determined by subtracting deductions allowed from the decedent's Massachusetts gross estate. The rates from the Massachusetts estate tax table are then applied to the Massachusetts taxable estate to obtain the estate tax. The amount of the estate tax is adjusted by the Massachusetts estate tax credit. If the federal credit for state death taxes is greater than the Massachusetts estate tax computed under the general rule, the excess is added to the Massachusetts estate tax. For an explanation of federal credit for state death taxes, see 830 CMR 65C.1.1(6)(e) below.

(b) Method of determining estate tax of resident decedents. In order to determine a resident decedent's Massachusetts taxable estate and compute the Massachusetts estate tax liability, the executor must determine each of the following:

1. Federal gross estate. The federal gross estate of a decedent, in general, includes the value of all property, wherever situated, in which the decedent had an interest at the date of death.

2. Massachusetts gross estate. The Massachusetts gross estate of a decedent, in general, is the value of the decedent's federal gross estate, which includes the value of all property in which the decedent had an interest at the date of death, reduced by

a. value of real and tangible personal property located outside of Massachusetts, and

b. the value of property subject to general powers of appointment on which Massachusetts inheritance taxes under M.G.L. c. 65, § 14 and St. 1975, c. 684, § 83 have been settled and paid.

For an explanation of the Massachusetts gross estate see 830 CMR 65C.2.1.

3. Massachusetts net estate. The Massachusetts net estate of a decedent is the value of a decedent's Massachusetts gross estate, less deductions allowed for funeral expenses, claims against the estate, and unpaid mortgages or liens.

4. Estate tax exemption. If the value of the Massachusetts net estate of a decedent is:

a. $200,000 or less, there is an exemption equal to the Massachusetts net estate and there is no estate tax due;

b. over $200,000, there is no exemption.

5. Massachusetts adjusted gross estate. The Massachusetts adjusted gross estate of a decedent is the value of the decedent's Massachusetts net estate, less deductions allowed for administration expenses and net losses.

6. Massachusetts taxable estate. The Massachusetts taxable estate of a decedent is the value of the decedent's Massachusetts adjusted gross estate, less deductions allowed for charitable deductions and the marital deduction. The Massachusetts marital deduction cannot exceed 50 percent of the decedent's Massachusetts adjusted gross estate.

7. Tax on Massachusetts taxable estate. The Massachusetts estate tax of a decedent is computed by applying the appropriate rate of tax from the Massachusetts estate tax table below to the decedent's Massachusetts taxable estate.

Massachusetts estate tax table

If the Massachusetts The Massachusetts
taxable estate is: estate tax will be:

Over But not over

$0 $50,000...……………………………......................5% of the taxable estate
$50,000 $100,000....…………………...$2,500 plus 7% of the excess over $50,000
$100,000 $200,000....………………….$6,000 plus 9% of the excess over $100,000
$200,000 $400,000...………………..$15,000 plus 10% of the excess over $200,000
$400,000 $600,000..………………...$35,000 plus 11% of the excess over $400,000
$600,000 $800,000..………………...$57,000 plus 12% of the excess over $600,000
$800,000 $1,000,000.……………….$81,000 plus 13% of the excess over $800,000
$1,000,000 $2,000,000…………….$107,000 plus 14% of the excess over $1,000,000
$2,000,000 $4,000,000…………….$247,000 plus 15% of the excess over $2,000,000
$4,000,000 .......…………………...$547,000 plus 16% of the excess over $4,000,000

8. Massachusetts estate tax credit. The amount of the Massachusetts estate tax credit is the lesser of $1500 or the amount of tax on the Massachusetts taxable estate, computed from the estate tax table in 830 CMR 65C.1.1(6)(b)7, above.

9. Limitation on amount of Massachusetts estate tax (20 percent provision). Notwithstanding 830 CMR 65C.1.1(6)(b)7, the amount of Massachusetts estate tax will not be greater than 20 percent of the amount by which the decedent's Massachusetts net estate exceeds $200,000.

10. Massachusetts estate tax. The actual Massachusetts estate tax is the lesser of the following two amounts:

a. the tax on the Massachusetts taxable estate, computed under 830 CMR 65C.1.1(6)(b)7, above, and reduced by the Massachusetts estate tax credit under 830 CMR 65C.1.1(6)(b)8, above; or

b. the limitation on the amount of Massachusetts estate tax (20 percent provision) under 830 CMR 65C.1.1(6)(b)9, above.

11. Federal credit for state death taxes. In certain circumstances, the federal credit for state death taxes may increase a decedent's Massachusetts estate tax liability. For an explanation of federal credit for state death taxes, see 830 CMR 65C.1.1(6)(e) below.

(c) Computation of tax for estates of non-resident decedents.

1. General rule. The computation of the Massachusetts estate tax for a non-resident decedent is a two step process, as follows:

a. Computation as if decedent were a Massachusetts resident. An executor first completes the Massachusetts Estate Tax Return (Form M-706), and computes the Massachusetts estate tax as if the decedent were a Massachusetts resident. See 830 CMR 65C.1.1(6)(b), above.

b. Application of apportionment formula. The executor then computes the actual Massachusetts estate tax for the non-resident decedent by multiplying the amount of tax computed as if the decedent were a Massachusetts resident (830 CMR 65C.1.1(6)(b), above) by an apportionment formula. The formula is a ratio, the numerator of which is the value of Massachusetts real and tangible personal property less any mortgages or liens on that property, and the denominator of which is the value of the Massachusetts gross estate computed as if the decedent were a Massachusetts resident, less any mortgages or liens on property included in the Massachusetts gross estate. The result is the Massachusetts estate tax liability for the estate of a non-resident decedent.

c. Mortgage or lien. For the purposes of this computation, any mortgage or lien on real property located in Massachusetts and included in the Massachusetts gross estate is deducted from the value of that property, in both the numerator and denominator of the ratio.

2. Computation formula. The computation is described by the following formula:

Value of Mass. real or
tangible personal
property less any Tax computed Mass. estate
mortgage or lien X as if decedent = tax for a
Value of Mass. gross were a Mass. non-resident
estate less any resident decedent
mortgage or lien

(d) Computation of tax for estates of decedents domiciled outside of the United States.

1. General rule. The computation of the Massachusetts estate tax for a decedent domiciled outside of the United States who owned real, tangible, or intangible personal property located in Massachusetts at date of death is the same as for a non-resident decedent. See 830 CMR 65C.1.1(6)(c), above.

2. Exceptions to general rule.

a. Where decedent owned only intangible property located in Massachusetts. Where a decedent domiciled-outside of the United States owned only intangible property located in Massachusetts at date of death, the amount of the Massachusetts estate tax is the amount of the federal credit for state death taxes, determined under 830 CMR 65C.1.1(6)(e)2c, below.

b. Decedents not United States citizens. Where a decedent domiciled outside of the United States was not a United States citizen and owned real, tangible, or intangible property located in Massachusetts at date of death, the executor applies the same rules as for decedents domiciled outside of the United States to compute the Massachusetts estate tax. However, the Massachusetts taxable estate is computed on the value of the decedent's property located in the United States (see sections 2101 through 2108 of the Code) rather than the value of all of the decedent's property wherever situated (section 2031 of the Code). See also 830 CMR 65C.1.1(6)(e)2c, below.

(e) Additional Massachusetts estate tax liability for maximum federal credit for state death taxes.

1. General rule. Where the executor of a decedent's estate files a federal estate tax return and pays a federal estate tax, a credit is allowed against the federal estate tax liability for state death taxes actually paid by the decedent's estate. If the maximum federal credit allowed for state death taxes is greater than the decedent's Massachusetts estate tax determined under 830 CMR 65C.1.1(6)(b), (c), or (d), above, the excess is added to the Massachusetts estate tax. If the maximum credit allowed for state death taxes is less than the decedent's Massachusetts estate tax, there is no adjustment to the Massachusetts estate tax.

2. Rules for computing the maximum federal credit for state death taxes.

a. Resident decedents. The maximum federal credit for state death taxes is computed on an amount equal to a decedent's Massachusetts taxable estate, based on the rates from section 2011 of the 1975 Code. In computing the maximum federal credit for state death taxes, added back to a decedent's Massachusetts taxable estate are the following two property interests which were not included in the decedent's Massachusetts gross estate:

i. The value of property subject to general powers of appointment, which was not included in the decedent's Massachusetts gross estate because inheritances taxes under M.G.L. c. 65, § 14 and St. 1975, c. 684, § 83 had been settled and paid. The value of that property is reduced by two amounts: any deductions under the Code attributable to that property interest, and the value of any real and tangible personal property outside of Massachusetts; and

ii. The value of QTIP property, which was not included in the decedent's Massachusetts gross estate, but which was included in the decedent's federal gross estate. The value of that property is reduced by two amounts: any deductions under the Code attributable to that property interest, and the value of any real and tangible personal property outside of Massachusetts.

b. Non-resident decedents. In order to determine the maximum federal credit for state death taxes for a non-resident decedent who owned real or tangible property located in Massachusetts, the Massachusetts taxable estate is computed the same as for a resident decedent. See 830 CMR 65C.1.1(6)(b), above. The maximum federal credit for state death taxes allowed is then multiplied by an apportionment formula, Described by the following ratio:

Value of real and tangible
personal property in Massachusetts
Value of Massachusetts
gross estate

If that portion of the federal credit for state taxes is greater than the decedent's Massachusetts estate tax determined under 830 CMR 65C.1.1(6)(c), above, the excess is added to the Massachusetts estate tax.

c. Decedents domiciled outside United States.

i. General rule. In order to determine the maximum federal credit for state death taxes for a decedent domiciled outside of the United States who owned real, tangible, or intangible personal property in Massachusetts, the Massachusetts taxable estate is computed the same as for a resident decedent. See 830 CMR 65C.1.1(6)(b), above. The maximum federal credit for state death taxes allowed is then multiplied by an apportionment formula, described by the following ratio:

Value of real, tangible, and intangible
personal property in Massachusetts
Value of Massachusetts
gross estate

If that portion of the federal credit for state death taxes is greater than the decedent's Massachusetts estate tax determined under 830 CMR 65C.1.1(6)(d), above, the excess is added to the Massachusetts estate tax. If there is no Massachusetts estate tax, the federal credit for state death taxes is the Massachusetts estate tax.

ii. Intangible Property located in Massachusetts. For purposes of determining the federal credit for state death taxes for decedents not domiciled in the United States, a decedent's intangible property located in Massachusetts includes but is not limited to the following: trust assets located in Massachusetts; cash, bank accounts, bonds, or stock certificates physically located in Massachusetts; stock issued by Massachusetts corporations; and debts owed to the decedent by Massachusetts residents or Massachusetts corporations.

iii. Decedents not United States citizens. For a decedent domiciled outside of the United States who was not a United States citizen, the executor applies the same rules as for decedents domiciled outside of the United States to compute the maximum federal credit for state death taxes. However, the decedent's Massachusetts taxable estate is computed on the value of property located in the United States (sections 2101 through 2108 of the Code) rather than the value of property wherever situated (sections 2031 through 2056 of the Code). See also 830 CMR 65C.1.1(6)(d)2b, above.

REGULATORY AUTHORITY

830 CMR 65C.1.1: M.G.L. c. 14, § 6(1); M.G.L. c. 62C, § 3; M.G.L. c. 65C, §§ 5(c) and 8.

REGULATORY HISTORY
Date of Promulgation: 5/26/89