The figure on line 7 from the NJ inheritance tax return would not come into play in this case, since all the beneficiaries are children of the "future" deceased, correct? or do you need to complete it , even though no tax is due so you have certain figures which then get transposed onto the Estate Tax return?
The children are exempt, as class A beneficiaries... the inheritance tax form is just used to calculate the "SIMPLE" method for calculating the ESTATE tax, when no federal 706 is done.
In looking at the NJ Estate Tax Return there are 2 methods by which one can calculate the NJ Estate Tax:
1) Column A - Simple Form
2) Column B - Form 706(2001)
Is one free to choose a method or are there qualifiers that direct you a specific method? In addition the second method uses figures from the Federal Form 706, If you do not file form 706 are you then
compelled to file under the Simple Method( Column A)?
The Director has prescribed a Simplified Tax System method pursuant to the provisions of the revised statute. This method may only be used in those situations where a Federal estate tax return has not and will not be filed nor is a tax return required to be filed with the Internal Revenue Service. The Simplified Tax System is not intended for use in all estates. Any attempt to develop a tax system which could be used in all situations and which would produce a tax liability similar to that produced using the Form 706 method would, of necessity, result in a tax system as complex as the Federal tax itself. The Simplified Tax System requires that a Form IT- Estate be prepared and filed along with a New Jersey inheritance tax return (Form IT-R) completed in accordance with the provisions of the inheritance tax statute in effect on December 31, 2001.
Furthermore, in looking at page 1 of the NJ Estate Tax return, lines 1 and 2 reference form IT-R , can you provide a link to this form?
Inheritance Tax Resident Return
Line 5 on this page references Schedule E-2 which wants you to list "transfers within 3 years of death not included or part of Line 3a of the IT-Estate Return. This appears to be adding back gifts made within 3 years and making them part of the taxable estate. Am I misreading this? and if so where and how?
My apologies, this IS correct, although others have contested. From a tax administration standpoint, the department has proscribed that it be added back.
AND (may be stating the obvious now) ... the estate tax form IS the simple method .. Using the federal 706 is the method to be used when a federal 706 is needed.
The estate tax form is used either way (transferring from the 706, when a 706 is needed ... transferring from the inheritance tax form - the simple method - when no 706 is needed)
... sorry it took us tis long to get here.