67-8-315 - Deductions. - Tennessee Statutes

67-8-315. Deductions.

(a)  For the purpose of determining the net estate subject to tax, the following deductions shall be deducted from the value of the gross estate; except that, in the case of a transfer other than by will or intestate law, the only deductions permitted shall be liens subject to which the transfer is made and transfer taxes paid or payable to other jurisdictions on intangible personal property; additionally, except for the deduction in subdivision (a)(6), in the case of the estate of a nonresident, only such portion of the following deductions shall be allowed as is properly chargeable against the property, the transfer of which is subject to taxation:

     (1)  The value of all property taxable under this part and part 4 of this chapter transferred to the United States, the state of Tennessee, or to any political subdivision thereof, any public institution therein exclusively used for public purposes, or any corporation, society, association or trust therein, or in a state that grants a like exemption to such institution in Tennessee formed for charitable, educational, scientific or religious purposes; provided, that the property so transferred is to be used exclusively for one (1) or more such purposes, but no deduction shall be allowed on account of property transferred to any such beneficiary, if any officer, member, shareholder or employee thereof shall receive, or be entitled to receive, any benefit or pecuniary profit from the operation thereof, except reasonable compensation in affecting one (1) or more of such purposes, or as beneficiaries of a strictly charitable purpose; if the organization of any such corporation, society, association or trust for any of the foregoing avowed purposes be a mere guise or pretense for directly or indirectly making for it or any of its officers, members, shareholders or employees any other pencuniary profit; or if it be not in good faith organized or conducted for one (1) or more of such purposes;

     (2)  Taxes:

          (A)  On real and tangible personal property within this state that were a lien at the date of death;

          (B)  On intangible personal property of the decedent or on the income from the property that constituted a personal obligation during the decedent's lifetime, or were a lien at date of death;

          (C)  Federal income taxes accrued upon the income of the decedent at the date of death;

          (D)  Death duties paid or payable to other jurisdictions on intangible personal property, but no deduction shall be allowed for the payment of any federal estate taxes; and

          (E)  Special assessments that, at the time of decedent's death, were a lien on real property within this state;

     (3)  Actual funeral expenses, and all other amounts reasonably and actually expended, or contracted to be expended, for the purchase of a memorial, or monument, to the decedent, if a resident of the state;

     (4)  (A)  Expenses of administration, including accounting fees, appraisal fees, court costs, compensation of executors, administrators, or trustees and their attorneys actually allowed and paid, not in excess of lawful rates. Where the claimed allowance is excessive, the commissioner is authorized to reduce it to a reasonable amount for the purpose of computing the tax. From an action of the commissioner in reducing the claimed amount, an appeal may be taken to the board provided for in § 67-8-411.

          (B)  Interest on federal estate tax actually paid and allowed by virtue of the Internal Revenue Code, 26 U.S.C. §§ 6161 and 6166 and interest on Tennessee inheritance tax actually paid and allowed by virtue of § 67-8-419(b), for a period not to exceed twenty-one (21) months after the date of the decedent's death is deductible as an expense of administration, but shall not be so allowed as a deduction in any other event or circumstance nor for any further length of time;

     (5)  Debts of the decedent that constituted lawful claims against the decedent's estate at the date of death; provided, that in the case of a resident decedent there shall not be allowed a debt secured by property outside of this state; except when the property by which the debt is secured is included in the measure of the tax imposed, or except when such debt exceeds the value of the property securing it, in which case the excess may be deducted; and

     (6)  An amount equal to the value of any interest in property that passes or has passed from the decedent to the surviving spouse, but only to the extent that such interest is included in determining the value of the gross estate. In determining the amount qualifying for the deduction under this subdivision (a)(6), the limitations, restrictions, definitions, elections and requirements set out in § 2056(b) and (c) of the Internal Revenue Code (26 U.S.C. § 2056(b) and (c)) shall be applicable to the deduction allowed by this subsection (a); provided, that the election specified by § 2056(b)(7) of the Internal Revenue Code (26 U.S.C. § 2056(b)(7)) must be made to the department.

(b)  No deduction from the value of the property included in the gross estate shall be allowed on account of any claim against the estate arising from a contract made by the decedent and payable by its terms at or after death, unless such claim is supported, in whole or in part, by a valuable consideration, in which event only so much thereof as is the equivalent in money value of the money value of the consideration received by the decedent shall be allowed as a deduction, but the remaining portion shall not be.

[Acts 1929 (E.S.), ch. 29, § 2(1), (4); Code 1932, §§ 1265, 1268; Acts 1937, ch. 129, §§ 2, 3; C. Supp. 1950, § 1265; Acts 1959, ch. 158, § 1; 1978, ch. 731, § 4; 1980, ch. 471, §§ 1-3; 1983, ch. 73, § 3; T.C.A. (orig. ed.), §§ 30-1608, 30-1611; Acts 1985, ch. 453, § 2.]