2012 -- S 2201

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STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2012

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A N A C T

RELATING TO TAXATION - ESTATE AND TRANSFER TAXES - COMPUTATION

     Introduced By: Senators Felag, Jabour, Walaska, McCaffrey, and Algiere

     Date Introduced: January 24, 2012

     Referred To: Senate Finance

It is enacted by the General Assembly as follows:

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     SECTION 1. Section 44-22-1.1 of the General Laws in Chapter 44-22 entitled “Estate

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and Transfer Taxes - Liability and Computation” is hereby amended to read as follows:

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     44-22-1.1. Tax on net estate of decedent. -- (a) (1) For decedents whose death occurs on

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or after January 1, 1992, but prior to January 1, 2002, a tax is imposed upon the transfer of the net

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estate of every resident or nonresident decedent as a tax upon the right to transfer. The tax is a

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sum equal to the maximum credit for state death taxes allowed by 26 U.S.C. § 2011.

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     (2) For decedents whose death occurs on or after January 1, 2002, but prior to January 1,

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2010 a tax is imposed upon the transfer of the net estate of every resident or nonresident decedent

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as a tax upon the right to transfer. The tax is a sum equal to the maximum credit for state death

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taxes allowed by 26 U.S.C. § 2011 as it was in effect as of January 1, 2001; provided, however,

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that the tax shall be imposed only if the net taxable estate shall exceed six hundred seventy-five

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thousand dollars ($675,000). Any scheduled increase in the unified credit provided in 26 U.S.C. §

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2010 in effect on January 1, 2001, or thereafter, shall not apply.

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       (3) For decedents whose death occurs on or after January 1, 2010, a tax is imposed upon

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the transfer of the net estate of every resident or nonresident decedent as a tax upon the right to

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transfer. The tax is a sum equal to the maximum credit for state death taxes allowed by 26 U.S.C.

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§ 2011 as it was in effect as of January 1, 2001; provided, however, that the tax shall be imposed

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only if the net taxable estate shall exceed eight hundred and fifty thousand dollars ($850,000) ;

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provided, further, beginning on January 1, 2011 and each January 1 thereafter, said amount shall

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be adjusted by the percentage of increase in the Consumer Price Index for all Urban Consumers

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(CPI-U) as published by the United States Department of Labor Statistics determined as of

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September 30 of the prior calendar year; said adjustment shall be compounded annually and shall

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be rounded up to the nearest five dollar ($5.00) increment. Any scheduled increase in the unified

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credit provided in 26 U.S.C. § 2010 in effect on January 1, 2003, or thereafter, shall not apply.

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     (4) For decedents whose death occurs on or after January 1, 2014, a tax is imposed upon

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the transfer of the net estate of every resident or nonresident decedent as a tax upon the right to

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transfer. The tax is a sum equal to the maximum credit for state death taxes allowed by 26 U.S.C.

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§ 2011 as it was in effect as of January 1, 2001; provided, however, that the tax shall be imposed

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only if the net taxable estate shall exceed one million five hundred thousand dollars ($1,500,000);

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provided, further, beginning on January 1, 2015 and each January 1 thereafter, said amount shall

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be adjusted by the percentage of increase in the Consumer Price Index for all Urban Consumers

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(CPI-U) as published by the United States Department of Labor Statistics determined as of

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September 30 of the prior calendar year; said adjustment shall be compounded annually and shall

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be rounded up to the nearest five dollar ($5.00) increment. Any scheduled increase in the unified

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credit provided in 26 U.S.C. § 2010 in effect on January 1, 2003, or thereafter, shall not apply.

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     (b) If the decedent's estate contains property having a tax situs not within the state, then

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the tax determined by this section is reduced to an amount determined by multiplying the tax by a

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fraction whose numerator is the gross estate excluding all property having a tax situs not within

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the state at the decedent's death and whose denominator is the gross estate. In determining the

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fraction, no deductions are considered and the gross estate is not reduced by a mortgage or other

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indebtedness for which the decedent's estate is not liable.

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     (c) The terms "gross taxable estate", "federal gross estate" or "net taxable estate" used in

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this chapter or chapter 23 of this title has the same meaning as when used in a comparable context

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in the laws of the United States, unless a different meaning is clearly required by the provisions of

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this chapter or chapter 23 of this title. Any reference in this chapter or chapter 23 of this title to

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the Internal Revenue Code or other laws of the United States means the Internal Revenue Code of

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1954, 26 U.S.C. § 1 et seq.

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      (2)(1) For decedents whose death occurs on or after January 1, 2002, the terms "gross

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taxable estate" "federal gross estate" or "net taxable estate" used in this chapter or chapter 23 of

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this title has the same meaning as when used in a comparable context in the laws of the United

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States, unless a different meaning is clearly required by the provisions of this chapter or chapter

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23 of this title. Any reference in this chapter or chapter 23 of this title to the Internal Revenue

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Code or other laws of the United States means the Internal Revenue Code of 1954, 26 U.S.C. § 1

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et seq., as they were in effect as of January 1, 2001, unless otherwise provided.

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     (d) All values are as finally determined for federal estate tax purposes.

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     (e) Property has a tax situs within the state of Rhode Island:

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     (1) If it is real estate or tangible personal property and has actual situs within the state of

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Rhode Island; or

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     (2) If it is intangible personal property and the decedent was a resident.

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     SECTION 2. This act shall take effect upon passage.

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LC00330

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N A C T

RELATING TO TAXATION - ESTATE AND TRANSFER TAXES - COMPUTATION

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     This act would increase the estate tax exemption from eight-hundred fifty thousand

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dollars ($850,000) to one million five hundred thousand dollars ($1,500,000) for deaths occurring

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after January 1, 2014.

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     This act would take effect upon passage.

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