67-8-304 - Taxable transfers generally. - Tennessee Statutes

67-8-304. Taxable transfers generally.

The following transfers enumerated in § 67-8-303 shall be taxable:

     (1)  Transfers made by a will;

     (2)  Transfers made by statutes regulating descent and distribution of property upon the death of the owner;

     (3)  Transfers made by gift of the decedent to the extent of the value of any interest in property transferred, by trust or otherwise, during the three-year period ending on the date of the decedent's death. Property for purposes of this subdivision (3) shall include any property specified in § 67-8-303. The value of the property on the date it was transferred, less the exemptions provided for under § 67-8-104, shall be includable; provided, that the transfer of a life insurance policy shall be includable at its proceeds value on the date of death without regard to the policy's value on the date of transfer or the exemptions provided for under § 67-8-104. In addition, any Tennessee gift tax paid on the transfer of any interest in property taxable under parts 3-5 of this chapter shall be a credit against any inheritance tax payable under parts 3-5 of this chapter. The amount of the gross estate, determined without regard to this sentence, shall be increased by the amount of any tax paid under part 1 of this chapter by the decedent or the decedent's estate on any gift made by the decedent or the decedent's spouse after December 31, 1978, during the three-year period ending on the date of the decedent's death;

     (4)  If by a domiciliary, any property specified in § 67-8-303(a)(1), and, if by a decedent who is not a domiciliary, any property specified in § 67-8-303(a)(2) transferred by the decedent prior to death by gift or grant intended to take effect in possession or enjoyment at or after death;

     (5)  A transfer of property subject to any charge, estate or interest, determinable by the death of the decedent or at any period ascertainable only by reference to the death of the decedent, is deemed to have been intended to take effect in possession or in enjoyment at or after death;

     (6)  If any transfer of property specified in subdivision (3), (4) or (5) was made for a valuable consideration, so much thereof as is the equivalent in money value of the money value of such present consideration received by the transferor shall not be included, but the remaining portion shall be;

     (7)  In case of any transfer of property specified in subdivision (5), the increase accruing to any person or corporation upon the extinction or termination of such charge, estate, or interest shall be deemed a transfer of property taxable under the provisions of parts 3-5 of this chapter;

     (8)  Transfers made pursuant to a power of appointment, held by the decedent, to the same extent that the transfer would be taxable pursuant to § 2041 of the Internal Revenue Code, except that:

          (A)  An unexercised general power of appointment, granted by a will, probated prior to November 1, 1978, and held by a decedent who died on or after May 1, 1980, and prior to May 28, 1981, shall not be a taxable transfer; and

          (B)  A credit shall be allowed against the tax liability imposed for the transfer of property by an unexercised general power of appointment that was irrevocable prior to November 1, 1978, if the property transferred by such power of appointment had previously been included in the taxable estate of a decedent spouse. The credit shall be calculated, using values reported on the return of the prior estate, by multiplying the ratio of:

                (i)  Value of the property transferred by such power of appointment, over

                (ii)  Value of property allocated to Class A beneficiaries by the return of the prior estate, times

                (iii)  Tax paid by the prior estate on transfers to Class A beneficiaries, as follows: (Click here to view Equation) This credit shall not, however, be allowed for the transfer of any property for which the credit, pursuant to § 67-8-317, is allowable.

          (C)  An overpayment of inheritance taxes, that resulted from a failure to take the credit referred to in subdivision (8)(B), shall be subject to refund on application of the estate made pursuant to § 67-1-707, and to the extent that no additional estate tax, pursuant to part 2 of this chapter would have been assessable as a result of such credit. Any such refund, in the amount of fifteen thousand dollars ($15,000) or more, shall be paid in three (3) equal annual installments. The first installment shall be made within a reasonable time following the approval of the claim for refund, the second installment shall be made within one (1) year following the first installment, and the third installment shall be made within two (2) years following the first installment;

     (9)  There shall be included for taxation under parts 3-5 of this chapter the value of any annuity or any other payment taxable for federal estate tax purposes under 26 U.S.C. § 2039 as amended by P.L. No. 98-369. The provisions enacted into federal law by the Tax Reform Act of 1984 shall be applicable to this subdivision (9), including all effective dates contained in the act; and

     (10)  (A)  Property in which the decedent held a “qualifying income interest for life,” as defined in § 2056(b)(7)(B)(ii) of the Internal Revenue Code, if:

                (i)  A deduction was allowed with respect to the transfer of such property to the decedent:

                     (a)  Under § 67-8-315(a)(6) by reason of its incorporation of § 2056(b)(7) of the Internal Revenue Code; or

                     (b)  Under § 67-8-105(a) by reason of its incorporation of § 2523(f) of the Internal Revenue Code;

                (ii)  The election specified in either § 2056(b)(7) or § 2523(f) of the Internal Revenue Code was made to the department of revenue; and

                (iii)  Section 67-8-101(e), relating to disposition of certain life estates, did not apply with respect to a disposition by the decedent of part or all of such property.

          (B)  For purposes of taxation under this subdivision (10), the classification of beneficiaries provided for by § 67-8-302 shall be determined by reference to the relationship of the beneficiaries of the remainder interest named in the instrument to the decedent or person creating such remainder interest.

[Acts 1929 (E.S.), ch. 29, § 1(2); Code 1932, § 1260; Acts 1973, ch. 362, § 2; 1977, ch. 388, § 1; 1978, ch. 731, §§ 1-3; 1980, ch. 872, § 1; 1981, ch. 413, § 1; 1983, ch. 73, §§ 2, 5, 6; T.C.A. (orig. ed.), § 30-1602; Acts 1985, ch. 364, § 3; 1985, ch. 453, § 1; 1992, ch. 1003, § 4.]