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--></style></head><body lang=EN-US link="#0563C1" vlink="#954F72" style='word-wrap:break-word'><div class=WordSection1><p class=MsoNormal><span style='font-size:11.0pt'>Hello, Listmates, <o:p></o:p></span></p><p class=MsoNormal><span style='font-size:11.0pt'><o:p> </o:p></span></p><p class=MsoNormal><span style='font-size:11.0pt'>A few weeks ago someone raised a question about WAC 458-57-125 and I did not notice any answer. If the nonresident decedent’s only asset in WA was a house in her own name valued at well less than the WA exclusion, I am surprised to see that the entire non-WA estate of the nonresident decedent is pulled into WA for calculations, with the result that WA estate tax would nonetheless be due (in the hypothetical below). Can anyone comment on this? <o:p></o:p></span></p><p class=MsoNormal><b><span style='font-size:11.0pt'><o:p> </o:p></span></b></p><p class=MsoNormal><b><span style='font-size:11.0pt'>“</span></b><span style='font-size:11.0pt'>(b) <b>Example – Nonresident decedent.</b> A widow dies during 2013 leaving a gross estate of $6 million. The decedent was a Colorado resident at death and all of the decedent's property is located in that state, except for a vacation home located in Washington valued at $650,000. The estate had $100,000 in expenses deductible for federal estate tax purposes. The applicable exclusion amount for 2013 is $2,000,000.<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:11.0pt'>Under the facts of this example, the estate owes Washington estate tax on a Washington taxable estate of $3,900,000, computed as shown below:<o:p></o:p></span></p><table class=MsoNormalTable border=0 cellspacing=0 cellpadding=0 width=324 style='width:243.0pt;border-collapse:collapse'><tr><td valign=top style='padding:.75pt .75pt .75pt .75pt'><div><p class=MsoNormal><span style='font-size:11.0pt'>Gross estate:<o:p></o:p></span></p></div></td><td valign=top style='padding:.75pt .75pt .75pt .75pt'><p class=MsoNormal><span style='font-size:11.0pt'>$6,000,000<o:p></o:p></span></p></td></tr><tr><td valign=top style='padding:.75pt .75pt .75pt .75pt'><p class=MsoNormal><span style='font-size:11.0pt'>Less allowable deductions:<o:p></o:p></span></p></td><td valign=top style='padding:.75pt .75pt .75pt .75pt'><p class=MsoNormal><span style='font-size:11.0pt'>($100,000)<o:p></o:p></span></p></td></tr><tr><td valign=top style='padding:.75pt .75pt .75pt .75pt'><p class=MsoNormal><span style='font-size:11.0pt'>Less applicable exclusion amount:<o:p></o:p></span></p></td><td valign=top style='padding:.75pt .75pt .75pt .75pt'><p class=MsoNormal><span style='font-size:11.0pt'>($2,000,000)<o:p></o:p></span></p></td></tr><tr><td valign=top style='padding:.75pt .75pt .75pt .75pt'><p class=MsoNormal><span style='font-size:11.0pt'>Washington taxable estate:<o:p></o:p></span></p></td><td valign=top style='padding:.75pt .75pt .75pt .75pt'><p class=MsoNormal><span style='font-size:11.0pt'>$3,900,000<o:p></o:p></span></p></td></tr></table><p class=MsoNormal><span style='font-size:11.0pt'>The preapportionment Washington estate tax for this estate, using the table provided in WAC <a href="http://app.leg.wa.gov/WAC/default.aspx?cite=458-57-115">458-57-115</a> (3)(a), equals $534,000, computed as follows: $390,000 + ($900,000 x 16%) = $534,000.<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:11.0pt'>Because the decedent owned property located outside Washington, the tax due to Washington is calculated by multiplying the amount of preapportionment tax computed above by the fraction described in this subsection (2). Also, because the decedent was not a Washington resident at death, the numerator of the fraction does not include the value of decedent's intangible personal property. The denominator of the fraction is the value of the decedent's gross estate. Using the facts in this example, the tax owed to Washington equals $57,850, computed as follows: ($650,000/$6,000,000) x $534,000 = $57,850.” <o:p></o:p></span></p><p class=MsoNormal><span style='font-size:11.0pt'><o:p> </o:p></span></p><p class=MsoNormal><span style='font-size:11.0pt'>A related query is: <o:p></o:p></span></p><p class=MsoNormal><span style='font-size:11.0pt'><o:p> </o:p></span></p><p class=MsoNormal><span style='font-size:11.0pt'>Nonresidents want to put WA real estate in LLCs to convert them to intangible, non-WA situs property under the newer DOR guidance. Understandable. But the guidance is scarce. <o:p></o:p></span></p><p class=MsoNormal><span style='font-size:11.0pt'>Is anyone aware of any concerns about making the nonresident’s Trust a Member of the LLC (instead of a natural person)? I don’t know why this would be a problem, but there isn’t much guidance and the stakes are high. <o:p></o:p></span></p><p class=MsoNormal><span style='font-size:11.0pt'><o:p> </o:p></span></p><p class=MsoNormal><span style='font-size:11.0pt'>Thank you,<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:11.0pt'><o:p> </o:p></span></p><p class=MsoNormal><span lang=EN style='font-size:10.0pt;font-family:"Arial",sans-serif;color:#1F497D;mso-ligatures:none'>Mimi M. Wagner <o:p></o:p></span></p><p class=MsoNormal><span lang=EN style='font-size:10.0pt;font-family:"Arial",sans-serif;color:#1F497D;mso-ligatures:none'>Wagner Law Offices P.C.<o:p></o:p></span></p><p class=MsoNormal><span lang=EN style='font-size:10.0pt;font-family:"Arial",sans-serif;color:#1F497D;mso-ligatures:none'>385 Court Street, Suite 4 <o:p></o:p></span></p><p class=MsoNormal><span lang=EN style='font-size:10.0pt;font-family:"Arial",sans-serif;color:#1F497D;mso-ligatures:none'>P.O. Box 3019<o:p></o:p></span></p><p class=MsoNormal><span lang=EN style='font-size:10.0pt;font-family:"Arial",sans-serif;color:#1F497D;mso-ligatures:none'>Friday Harbor, WA 98250<br></span><span style='font-size:11.0pt'><a href="mailto:mimi@sanjuanlaw.com"><span lang=EN style='font-size:10.0pt;font-family:"Arial",sans-serif;color:blue;mso-ligatures:none'>mimi@sanjuanlaw.com</span></a></span><span lang=EN style='font-size:10.0pt;font-family:"Arial",sans-serif;color:#1F497D;mso-ligatures:none'><br>Phone (360) 378-6234<br>Fax (360) 378-6244<br></span><span style='font-size:11.0pt'><a href="http://www.sanjuanlaw.com/"><span lang=EN style='font-size:10.0pt;font-family:"Arial",sans-serif;color:blue;mso-ligatures:none'>www.sanjuanlaw.com</span></a></span><span lang=EN style='font-size:10.0pt;font-family:"Arial",sans-serif;color:#1F497D;mso-ligatures:none'><o:p></o:p></span></p><p class=MsoNormal><span style='font-size:10.0pt;color:#1F497D;mso-ligatures:none'>This email is sent by a law office and contains information that may be privileged and confidential, or protected by the work product doctrine. </span><span lang=EN style='font-size:10.0pt;color:#1F497D;mso-ligatures:none'>If you believe that it has been sent to you in error, do not read it. Please notify the sender that you have received the message in error, and then delete it. To comply with IRS rules, we must tell you that if this message contains advice relating to federal taxes, that advice was not intended to be used, and cannot be used, for avoiding penalties that may be imposed under federal tax law. </span><span style='font-size:10.0pt;color:#1F497D;mso-ligatures:none'><o:p></o:p></span></p><p class=MsoNormal><o:p> </o:p></p></div></body></html>