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Megan C
Megan C, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 16575
Experience:  Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
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I am not clear on how to show the value of a QTIP and

Customer Question

I am not clear on how to show the value of a QTIP and offsetting marital deduction on the NJ Estate Return. My father died in August 2015. I set up a credit shelter trust of $675K in December. It is now worth $700K. When my mother dies and I have to prepare the final estate tax return for her, is the credit shelter trust (QTIP) included on Line 4(a) and added back (the instructions seem to require this) and if it is, do I include the same dollar amount on Line 5(a) as a deduction. This seems to be the only way to make sense of this although the instructions say that Schedule E-2 deductions (to Line 5(a)) do not include QTIP Property. I need a clarification on this so I will benefit from the marital deduction exclusion when I actually have to pay the estate tax. (Note this is not an issue now since no tax will be paid when I file the Estate Tax Return for my father).
Submitted: 11 months ago.
Category: Tax
Expert:  Megan C replied 11 months ago.

The state of New Jersey is decoupled from Federal Estate Tax law, and as such it's different. If the surviving spouse (your mother) has a QTIP, the value of the QTIP is added back to the estate. Schedule E-2 would not include a deduction for QTIP property. It is not deducted.

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