H-2614.1          _______________________________________________

                                  HOUSE BILL 2196

                  _______________________________________________

State of Washington              52nd Legislature             1991 Regular Session

By Representative Brekke.

Read first time April 5, 1991.  Referred to Committee on Revenue.Modifying the estate and transfer tax act.

     AN ACT Relating to the estate and transfer tax act; amending RCW 83.100.010, 83.100.020, 83.100.030, 83.100.040, and 83.100.045; and adding a new section to chapter 83.100 RCW.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

     Sec. 1.  RCW 83.100.010 and 1988 c 64 s 1 are each amended to read as follows:

     This chapter may be cited as the "Estate and Transfer Tax Act of ((1988)) 1991."

     Sec. 2.  RCW 83.100.020 and 1990 c 224 s 1 are each amended to read as follows:

     As used in this chapter:

     (1) "Decedent" means a deceased individual;

     (2) "Department" means the department of revenue, the director of that department, or any employee of the department exercising authority lawfully delegated to him by the director;

     (3) "Federal credit" means (a) for a transfer, the maximum amount of the credit for state taxes allowed by section 2011 of the United States Internal Revenue Code of 1986, as amended or renumbered; and (b) for a generation-skipping transfer, the maximum amount of the credit for state taxes allowed by section 2604 of the United States Internal Revenue Code of 1986, as amended or renumbered;

     (4) "Federal return" means any tax return required by chapter 11 or 13 of the United States Internal Revenue Code of 1986, as amended or renumbered, and any regulations thereunder;

     (5) "Federal tax" means (a) for a transfer, a tax under chapter 11 of the United States Internal Revenue Code of 1986, as amended or renumbered; and (b) for a generation-skipping transfer, the tax under chapter 13 of the United States Internal Revenue Code of 1986, as amended or renumbered;

     (6) "Federal taxable estate" means taxable estate as defined in section 2051 of the United States Internal Revenue Code of 1986;

(7) "Generation-skipping transfer" means a "generation‑skipping transfer" as defined and used in section 2611 of the United States Internal Revenue Code of 1986, as amended or renumbered;

     (((7))) (8) "Gross estate" means "gross estate" as defined and used in section 2031 of the United States Internal Revenue Code of 1986, as amended or renumbered;

     (((8))) (9) "Net estate" means federal taxable estate, less deductions allowed under this chapter;

(10) "Nonresident" means a decedent who was domiciled outside Washington at his death;

     (((9))) (11) "Person" means any individual, estate, trust, receiver, cooperative association, club, corporation, company, firm, partnership, joint venture, syndicate, or other entity and, to the extent permitted by law, any federal, state, or other governmental unit or subdivision or agency, department, or instrumentality thereof;

     (((10))) (12) "Person required to file the federal return" means any person required to file a return required by chapter 11 or 13 of the Internal Revenue Code of 1986, as amended or renumbered, such as the personal representative of an estate; or a transferor, trustee, or beneficiary of a generation-skipping transfer; or a qualified heir with respect to qualified real property, as defined and used in section 2032A(c) of the United States Internal Revenue Code of 1986, as amended or renumbered;

     (((11))) (13) "Property" means (a) for a transfer, property included in the gross estate; and (b) for a generation-skipping transfer, all real and personal property subject to the federal tax;

     (((12))) (14) "Resident" means a decedent who was domiciled in Washington at time of death;

     (((13))) (15) "Transfer" means "transfer" as used in section 2001 of the United States Internal Revenue Code of 1986, as amended or renumbered, or a disposition or cessation of qualified use as defined and used in section 2032A(c) of the United States Internal Revenue Code of 1986, as amended or renumbered; and

     (((14))) (16) "Trust" means "trust" under Washington law and any arrangement described in section 2652 of the Internal Revenue Code of 1986, as amended or renumbered.

     (((15))) References in this chapter to the United States internal revenue code of 1986, to a chapter of the code, and to regulations under the code are to the code, chapters, and regulations in effect on June 7, 1990.

NEW SECTION. Sec. 3.  A new section is added to chapter 83.100 RCW to read as follows:

     In computing net estate, a deduction of six hundred thousand dollars is allowed.

     Sec. 4.  RCW 83.100.030 and 1988 c 64 s 3 are each amended to read as follows:

     (1) A tax in an amount equal to the greater of the federal credit or ten percent of the net estate is imposed on every transfer of property of a resident.

     (2) If the transfer is subject to a similar tax imposed by another state ((for which the federal credit is allowed)), and if the tax imposed by the other state is not qualified by a reciprocal provision allowing the transfer to be taxed only in this state, the amount of the tax due under this section shall be credited with the lesser of:

     (a) The amount of the death tax paid the other state ((and credited against the federal tax)); or

     (b) An amount computed by multiplying the ((federal credit)) amount of tax imposed under this chapter by a fraction, the numerator of which is the value of the property subject to the tax imposed by the other state, and the denominator of which is the value of the decedent's gross estate.

     Sec. 5.  RCW 83.100.040 and 1988 c 64 s 4 are each amended to read as follows:

     (1) A tax in an amount computed as provided in this section is imposed on every transfer of property located in Washington of every nonresident.

     (2) The tax shall be computed by multiplying the greater of the federal credit or the net estate by a fraction, the numerator of which is the value of the property located in Washington, and the denominator of which is the value of the decedent's gross estate, and then multiplying the result by ten percent.

     (3) The transfer of the property of a nonresident is exempt from the tax imposed by this section to the extent that the property of residents is exempt from taxation under the laws of the state in which the nonresident is domiciled.

     Sec. 6.  RCW 83.100.045 and 1988 c 64 s 5 are each amended to read as follows:

     (1) A tax in an amount equal to the greater of the federal credit or ten percent of the net estate is imposed on every generation‑skipping transfer, if real or tangible personal property subject to the federal tax is located in this state or if the trust has its principal place of administration in this state at the time of the generation-skipping transfer.

     (2) If the generation-skipping transfer is subject to a similar tax imposed by another state ((for which the federal credit is allowed)), the amount of the tax due under this section shall be credited with the lesser of:

     (a) The amount of the tax paid to the other state ((and credited against the federal tax)); or

     (b) An amount computed by multiplying the ((federal credit)) amount of tax imposed under this chapter by a fraction, the numerator of which is the value of the property subject to the generation-skipping transfer tax imposed by the other state, and the denominator of which is the value of all property subject to the federal tax.