G.S. 105-32.2(a) - North Carolina imposes an estate tax on the
estate of a decedent when a federal estate tax is imposed on the
estate and the decedent was either (1) a resident of North Carolina
who owned property in North Carolina or property that has a tax
situs in another state or, (2) a nonresident who owned real property
in North Carolina or personal property that has a tax situs in
G.S. 105-32.2(b) - Under federal estate law enacted in 2001, the
state death tax credit was phased out over three years beginning
in 2002. For estates of decedents dying after December 31, 2004,
the state death tax credit was replaced with a deduction for state
death taxes. Under North Carolina law, an estate that is not subject
to the federal estate tax is not subject to the State estate tax.
However, the North Carolina General Assembly did not adopt either
the federal phase-out or termination of the credit. Therefore,
the North Carolina estate tax is equal to the 2001 state death
tax credit for estates of decedents dying before July 1, 2005.
The 2004 General Assembly amended G.S. 105-32.2(b) to provide
that the North Carolina estate tax is calculated without regard
to the deduction for state death taxes allowed under section 2058
of the Code. (Code section 2058 replaces the state death tax credit
with a deduction for state death taxes for decedents dying after
December 31, 2004.) The amendment was scheduled to expire
on July 1, 2005. However, the 2005 General Assembly repealed
Therefore, for decedents dying on or after January 1, 2005, the North
Carolina estate tax will continue to be equal to the state death
tax credit that was allowable under section 2011 of the Internal
Revenue Code as it existed prior to 2002. The amount of North Carolina estate tax cannot exceed the amount of federal estate tax determined without regard to the deduction for state death taxes allowed under Section 2058 of the Code and the tax credits allowed under Sections 2011 through 2015 of the Code.
G.S. 105-32.4 - A North Carolina Estate Tax Return (Form
A-101) is required to be filed by the personal representative
if a federal estate tax return is required to be filed with the
Internal Revenue Service. The North Carolina Estate Tax Return must be filed with the North Carolina
Department of Revenue at the same time the federal estate tax return
is due, which is nine months from the date of death.
If the Internal Revenue Service corrects or otherwise determines gross estate tax,
an amended State return must be filed within six months from the date the report is
received. If the personal representative fails to report the federal changes, a 5%
penalty for each month the federal changes are not reported to the Revenue Department
will be assessed. The penalty cannot exceed 25% of the additional tax.
Estate Tax Waivers: Senate Bill 1229, which was
signed into law on July 30, 1998, amended the inheritance tax statutes
effective for estates of decedents dying on or after August 1, 1998.
Under prior law, bank accounts, certificates of deposit, IRAs,
corporate stocks, bonds, etc., could not be transferred from the
decedent’s name without a tax waiver from the Department of
Revenue. Senate Bill 1229 repealed the requirement that
an inheritance and estate tax waiver (Form A-105) be obtained from
the Department before ownership of a decedent’s bank accounts,
stocks, bonds, etc., can be transferred.
(Because estate taxes are still a lien against real property owned
by the decedent, waivers will still be issued for real estate if
Last modified on:
08/01/08 09:32:36 AM.