Tuesday, March 16, 2010

QTIP election for NYS

With the current no-federal estate tax situation, a question arose as to whether a QTIP election could be made for the NYS estate tax.  New York State law did not allow a separate QTIP election.  A QTIP election was allowed for NYS estate tax purposes if the election was made on the federal estate tax return.  Where there is no federal estate tax, or no estate tax return was required to be filed a separate NYS QTIP election could not be made. 

New York State Department of Taxation and Finance has now rectified this problem with the issuance of TSB-M-10(1)M (issued on March 16, 2010).  A separate NYS QTIP election can be made by attaching a pro-forma federal estate tax return to the NYS estate tax return. 

The TSB states that for the year 2010, if there is no federal estate tax, the federal form to be used for the pro-forma purposes is the Form 706 (Rev. 9-2009) used for decedents dying in 2009.