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5 | 5 | | 2023 -- H 5631 |
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6 | 6 | | ======== |
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7 | 7 | | LC001426 |
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8 | 8 | | ======== |
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9 | 9 | | S TATE OF RHODE IS LAND |
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10 | 10 | | IN GENERAL ASSEMBLY |
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11 | 11 | | JANUARY SESSION, A.D. 2023 |
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12 | 12 | | ____________ |
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13 | 13 | | |
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14 | 14 | | A N A C T |
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15 | 15 | | RELATING TO TAXATION -- ESTATE AND TRANSFER TAXES--LIABILITY AND |
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16 | 16 | | COMPUTATION |
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17 | 17 | | Introduced By: Representatives P. Morgan, Fenton-Fung, Nardone, Roberts, Rea, Serpa, |
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18 | 18 | | and Kennedy |
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19 | 19 | | Date Introduced: February 15, 2023 |
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20 | 20 | | Referred To: House Finance |
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21 | 21 | | |
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22 | 22 | | |
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23 | 23 | | It is enacted by the General Assembly as follows: |
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24 | 24 | | SECTION 1. Chapter 44-22 of the General Laws entitled "Estate and Transfer Taxes — 1 |
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25 | 25 | | Liability and Computation" is hereby repealed in its entirety. 2 |
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26 | 26 | | CHAPTER 44-22 3 |
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27 | 27 | | Estate and Transfer Taxes — Liability and Computation 4 |
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28 | 28 | | 44-22-1. Tax on net estate of decedents — Additional tax on postponed enjoyment — 5 |
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29 | 29 | | Deductions — Marital deduction. 6 |
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30 | 30 | | (a) A tax is imposed upon the transfer of the net estate of every resident or nonresident 7 |
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31 | 31 | | decedent as a tax upon the right to transfer. The tax is imposed at the rate of two percent (2%) upon 8 |
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32 | 32 | | all amounts not in excess of twenty-five thousand dollars ($25,000); at the rate of three percent 9 |
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33 | 33 | | (3%) upon all amounts in excess of twenty-five thousand dollars ($25,000) and not exceeding fifty 10 |
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34 | 34 | | thousand dollars ($50,000); at the rate of four percent (4%) upon all amounts in excess of fifty 11 |
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35 | 35 | | thousand dollars ($50,000) and not exceeding one hundred thousand dollars ($100,000); at the rate 12 |
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36 | 36 | | of five percent (5%) upon all amounts in excess of one hundred thousand dollars ($100,000) and 13 |
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37 | 37 | | not exceeding two hundred fifty thousand dollars ($250,000); at the rate of six percent (6%) upon 14 |
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38 | 38 | | all amounts in excess of two hundred fifty thousand dollars ($250,000) and not exceeding five 15 |
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39 | 39 | | hundred thousand dollars ($500,000); at the rate of seven percent (7%) upon all amounts in excess 16 |
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40 | 40 | | of five hundred thousand dollars ($500,000) and not exceeding seven hundred fifty thousand dollars 17 |
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41 | 41 | | ($750,000); at the rate of eight percent (8%) upon all amounts in excess of seven hundred fifty 18 |
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42 | 42 | | |
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43 | 43 | | |
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44 | 44 | | LC001426 - Page 2 of 6 |
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45 | 45 | | thousand dollars ($750,000) and not exceeding one million dollars ($1,000,000); at the rate of nine 1 |
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46 | 46 | | percent (9%) upon all amounts in excess of one million dollars ($1,000,000). An additional tax is 2 |
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47 | 47 | | imposed at the rate of two percent (2%) upon all or any part of each estate devised, bequeathed, or 3 |
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48 | 48 | | conveyed in such manner that it becomes necessary to postpone the assessment of taxes imposed 4 |
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49 | 49 | | by this chapter until the person entitled to the estate comes into beneficial enjoyment or possession 5 |
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50 | 50 | | of the estate; and provided, further, that an additional tax is not assessed and collected, as provided 6 |
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51 | 51 | | in §§ 44-23-9 — 44-23-12, in case a settlement of taxes is effected under the provisions of § 44-7 |
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52 | 52 | | 23-25. 8 |
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53 | 53 | | (b) In computing the value of the net estate in subsection (a) of this section, there is 9 |
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54 | 54 | | deducted from the estate and exempted from the tax twenty-five thousand dollars ($25,000). 10 |
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55 | 55 | | (c) In computing the value of the net estate in subsection (a) of this section, there is 11 |
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56 | 56 | | deducted from the estate and exempted from the tax all property or interests transferred to any 12 |
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57 | 57 | | corporation, association, or institution located in Rhode Island which is exempt from taxation by 13 |
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58 | 58 | | charter or under the laws of this state; or to any corporation, association, or institution located 14 |
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59 | 59 | | outside of this state, which if located within this state, would be exempt from taxation; provided, 15 |
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60 | 60 | | that the state of domicile of the corporation, association, or institution allows a reciprocal 16 |
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61 | 61 | | exemption to any similar Rhode Island corporation, association, or institution; or to any person in 17 |
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62 | 62 | | trust for the same or for use by the same for charitable purposes; or to any city or town in this state 18 |
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63 | 63 | | for public purposes. 19 |
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64 | 64 | | (d) In computing the value of the net estate in subsection (a) of this section, there is 20 |
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65 | 65 | | deducted from the estate and exempted from the tax United States civil and federal military service 21 |
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66 | 66 | | annuity payments. 22 |
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67 | 67 | | (e) In computing the value of the net estate in subsection (a) of this section, there is 23 |
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68 | 68 | | deducted from the estate and exempted from the estate tax a marital deduction, as defined in 26 24 |
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69 | 69 | | U.S.C. § 2056, in the amount of one hundred seventy-five thousand dollars ($175,000), from 25 |
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70 | 70 | | property or beneficial interests which pass or have passed from the decedent to the surviving 26 |
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71 | 71 | | spouse, but only to the extent that the interests are included in determining the value of the gross 27 |
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72 | 72 | | estate. 28 |
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73 | 73 | | (f)(1) In computing the value of the net estate in subsection (a) of this section, there is 29 |
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74 | 74 | | deducted from the estate and exempted from the estate tax, an orphan’s deduction, provided, that: 30 |
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75 | 75 | | (i) the decedent does not have a surviving spouse, and (ii) the decedent is survived by a minor child 31 |
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76 | 76 | | who, immediately after the death of the decedent, has no known parent, an amount equal to the 32 |
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77 | 77 | | value of any interest in property which passes or has passed from the decedent to the child, but only 33 |
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78 | 78 | | to the extent that the interest is included in determining the value of the gross estate. The aggregate 34 |
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79 | 79 | | |
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80 | 80 | | |
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81 | 81 | | LC001426 - Page 3 of 6 |
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82 | 82 | | amount of the deductions allowed under this section (computed without regard to this subsection) 1 |
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83 | 83 | | with respect to interests in property passing to any minor child shall not exceed an amount equal to 2 |
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84 | 84 | | five thousand dollars ($5,000) multiplied by the excess of twenty-one (21) over the age (in years) 3 |
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85 | 85 | | which the child has attained on the date of the decedent’s death. 4 |
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86 | 86 | | (2) For purposes of this subsection, any term used in the subsection has the same meaning 5 |
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87 | 87 | | as when used in a comparable context in 26 U.S.C. § 2057 unless a different meaning is clearly 6 |
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88 | 88 | | required. 7 |
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89 | 89 | | (g) Notwithstanding any other provisions of this chapter, the total estate tax payment on 8 |
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90 | 90 | | account of the estate of a decedent whose death occurs on or after January 1, 1986, is that percentage 9 |
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91 | 91 | | of the estate tax which would be payable under this chapter determined in accordance with the 10 |
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92 | 92 | | following schedule: 11 |
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93 | 93 | | (1) Death prior to January 1, 1987. Ninety percent (90%) in the case of decedents whose 12 |
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94 | 94 | | deaths occur on or after January 1, 1986, and prior to January 1, 1987; 13 |
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95 | 95 | | (2) Death prior to January 1, 1988. Eighty percent (80%) in the case of decedents whose 14 |
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96 | 96 | | deaths occur on or after January 1, 1987, and prior to January 1, 1988; 15 |
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97 | 97 | | (3) Death prior to January 1, 1989. Sixty percent (60%) in the case of decedents whose 16 |
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98 | 98 | | deaths occur on or after January 1, 1988, and prior to January 1, 1989; 17 |
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99 | 99 | | (4) Death prior to January 1, 1990. Forty percent (40%) in the case of decedents whose 18 |
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100 | 100 | | deaths occur on or after January 1, 1989, and prior to January 1, 1990; 19 |
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101 | 101 | | (5) Death prior to June 1, 1990. Twenty percent (20%) in the case of decedents whose 20 |
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102 | 102 | | deaths occur on or after January 1, 1990, and prior to June 1, 1990; 21 |
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103 | 103 | | (6) Death prior to January 1, 1992. Forty percent (40%) in the case of decedents whose 22 |
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104 | 104 | | deaths occur on or after June 1, 1990, and prior to January 1, 1992. 23 |
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105 | 105 | | (7) Death on or after January 1, 1992. The estate tax payable on or account of the estate of 24 |
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106 | 106 | | a decedent whose death occurs on or after January 1, 1992, is determined in accordance with § 44-25 |
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107 | 107 | | 22-1.1. 26 |
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108 | 108 | | (h) The estate tax payable under this section shall in no event be less than the estate tax due 27 |
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109 | 109 | | under § 44-22-1.1, computed without regard to the date of death. 28 |
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110 | 110 | | 44-22-1.1. Tax on net estate of decedent. 29 |
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111 | 111 | | (a)(1) For decedents whose death occurs on or after January 1, 1992, but prior to January 30 |
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112 | 112 | | 1, 2002, a tax is imposed upon the transfer of the net estate of every resident or nonresident decedent 31 |
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113 | 113 | | as a tax upon the right to transfer. The tax is a sum equal to the maximum credit for state death 32 |
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114 | 114 | | taxes allowed by 26 U.S.C. § 2011. 33 |
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115 | 115 | | (2) For decedents whose death occurs on or after January 1, 2002, but prior to January 1, 34 |
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116 | 116 | | |
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117 | 117 | | |
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118 | 118 | | LC001426 - Page 4 of 6 |
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119 | 119 | | 2010, a tax is imposed upon the transfer of the net estate of every resident or nonresident decedent 1 |
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120 | 120 | | as a tax upon the right to transfer. The tax is a sum equal to the maximum credit for state death 2 |
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121 | 121 | | taxes allowed by 26 U.S.C. § 2011 as it was in effect as of January 1, 2001; provided, however, 3 |
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122 | 122 | | that the tax shall be imposed only if the net taxable estate shall exceed six hundred seventy-five 4 |
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123 | 123 | | thousand dollars ($675,000). Any scheduled increase in the unified credit provided in 26 U.S.C. § 5 |
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124 | 124 | | 2010 in effect on January 1, 2001, or thereafter, shall not apply. 6 |
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125 | 125 | | (3) For decedents whose death occurs on or after January 1, 2010, and prior to January 1, 7 |
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126 | 126 | | 2015, a tax is imposed upon the transfer of the net estate of every resident or nonresident decedent 8 |
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127 | 127 | | as a tax upon the right to transfer. The tax is a sum equal to the maximum credit for state death 9 |
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128 | 128 | | taxes allowed by 26 U.S.C. § 2011 as it was in effect as of January 1, 2001; provided, however, 10 |
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129 | 129 | | that the tax shall be imposed only if the net taxable estate shall exceed eight hundred and fifty 11 |
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130 | 130 | | thousand dollars ($850,000); provided, further, beginning on January 1, 2011, and each January 1 12 |
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131 | 131 | | thereafter until January 1, 2015, said amount shall be adjusted by the percentage of increase in the 13 |
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132 | 132 | | Consumer Price Index for all Urban Consumers (CPI-U) as published by the United States 14 |
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133 | 133 | | Department of Labor Statistics determined as of September 30 of the prior calendar year; said 15 |
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134 | 134 | | adjustment shall be compounded annually and shall be rounded up to the nearest five dollar ($5.00) 16 |
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135 | 135 | | increment. Any scheduled increase in the unified credit provided in 26 U.S.C. § 2010 in effect on 17 |
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136 | 136 | | January 1, 2003, or thereafter, shall not apply. 18 |
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137 | 137 | | (4) For decedents whose death occurs on or after January 1, 2015, a tax is imposed upon 19 |
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138 | 138 | | the transfer of the net estate of every resident or nonresident decedent as a tax upon the right to 20 |
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139 | 139 | | transfer. The tax is a sum equal to the maximum credit for state death taxes allowed by 26 U.S.C. 21 |
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140 | 140 | | § 2011, as it was in effect as of January 1, 2001; provided, however, that a Rhode Island credit shall 22 |
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141 | 141 | | be allowed against any tax so determined in the amount of sixty-four thousand four hundred 23 |
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142 | 142 | | ($64,400). Any scheduled increase in the unified credit provided in 26 U.S.C. § 2010 in effect on 24 |
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143 | 143 | | January 1, 2003, or thereafter, shall not apply; provided, further, beginning on January 1, 2016, and 25 |
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144 | 144 | | each January 1 thereafter, said Rhode Island credit amount under this section shall be adjusted by 26 |
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145 | 145 | | the percentage of increase in the Consumer Price Index for all Urban Consumers (CPI-U) as 27 |
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146 | 146 | | published by the United States Department of Labor Statistics determined as of September 30 of 28 |
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147 | 147 | | the prior calendar year; said adjustment shall be compounded annually and shall be rounded up to 29 |
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148 | 148 | | the nearest five dollar ($5.00) increment. 30 |
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149 | 149 | | (b) If the decedent’s estate contains property having a tax situs not within the state, then 31 |
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150 | 150 | | the tax determined by this section is reduced to an amount determined by multiplying the tax by a 32 |
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151 | 151 | | fraction whose numerator is the gross estate excluding all property having a tax situs not within the 33 |
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152 | 152 | | state at the decedent’s death and whose denominator is the gross estate. In determining the fraction, 34 |
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153 | 153 | | |
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154 | 154 | | |
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155 | 155 | | LC001426 - Page 5 of 6 |
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156 | 156 | | no deductions are considered and the gross estate is not reduced by a mortgage or other 1 |
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157 | 157 | | indebtedness for which the decedent’s estate is not liable. 2 |
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158 | 158 | | (c)(1) The terms “gross taxable estate,” “federal gross estate” or “net taxable estate” used 3 |
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159 | 159 | | in this chapter or chapter 23 of this title has the same meaning as when used in a comparable context 4 |
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160 | 160 | | in the laws of the United States, unless a different meaning is clearly required by the provisions of 5 |
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161 | 161 | | this chapter or chapter 23 of this title. Any reference in this chapter or chapter 23 of this title to the 6 |
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162 | 162 | | Internal Revenue Code or other laws of the United States means the Internal Revenue Code of 7 |
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163 | 163 | | 1954, 26 U.S.C. § 1 et seq. 8 |
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164 | 164 | | (2) For decedents whose death occurs on or after January 1, 2002, the terms “gross taxable 9 |
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165 | 165 | | estate” “federal gross estate” or “net taxable estate” used in this chapter or chapter 23 of this title 10 |
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166 | 166 | | has the same meaning as when used in a comparable context in the laws of the United States, unless 11 |
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167 | 167 | | a different meaning is clearly required by the provisions of this chapter or chapter 23 of this title. 12 |
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168 | 168 | | Any reference in this chapter or chapter 23 of this title to the Internal Revenue Code or other laws 13 |
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169 | 169 | | of the United States means the Internal Revenue Code of 1954, 26 U.S.C. § 1 et seq., as they were 14 |
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170 | 170 | | in effect as of January 1, 2001, unless otherwise provided. 15 |
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171 | 171 | | (d) All values are as finally determined for federal estate tax purposes. 16 |
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172 | 172 | | (e) Property has a tax situs within the state of Rhode Island: 17 |
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173 | 173 | | (1) If it is real estate or tangible personal property and has actual situs within the state of 18 |
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174 | 174 | | Rhode Island; or 19 |
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175 | 175 | | (2) If it is intangible personal property and the decedent was a resident. 20 |
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176 | 176 | | 44-22-2. Exemption — Missing persons in military action. 21 |
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177 | 177 | | An estate of a serviceman or servicewoman who has been classified by the armed forces 22 |
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178 | 178 | | of the United States as missing in action is exempt from provisions of this chapter pertaining to 23 |
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179 | 179 | | taxation. 24 |
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180 | 180 | | 44-22-3 — 44-22-7. Repealed. 25 |
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181 | 181 | | 44-22-8 — 44-22-11. Repealed. 26 |
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182 | 182 | | 44-22-12 — 44-22-20. Repealed. 27 |
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183 | 183 | | 44-22-21. Repealed. 28 |
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184 | 184 | | 44-22-22 — 44-22-24. Repealed. 29 |
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185 | 185 | | 44-22-25. Repealed. 30 |
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186 | 186 | | 44-22-26. [Renumbered.] 31 |
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187 | 187 | | SECTION 2. This act shall take effect upon passage. 32 |
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189 | 189 | | LC001426 |
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191 | 191 | | |
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192 | 192 | | |
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193 | 193 | | LC001426 - Page 6 of 6 |
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194 | 194 | | EXPLANATION |
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195 | 195 | | BY THE LEGISLATIVE COUNCIL |
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196 | 196 | | OF |
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197 | 197 | | A N A C T |
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198 | 198 | | RELATING TO TAXATION -- ESTATE AND TRANSFER TAXES--LIABILITY AND |
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199 | 199 | | COMPUTATION |
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200 | 200 | | *** |
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201 | 201 | | This act would eliminate the estate tax in Rhode Island. 1 |
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202 | 202 | | This act would take effect upon passage. 2 |
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203 | 203 | | ======== |
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204 | 204 | | LC001426 |
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