Recent Developments in Indiana Taxation - I.U. School of Law ...

More documents

Recommendations

Info

1170 INDIANA LAW REVIEW [Vol. 40:1103 768 under a de novo standard, the Tax Court agreed with the DOR’s argument. It found that the language of the statute and the commentary to it clearly covered any differences between parties with an interest in an estate, whether or not the 769 difference resulted in litigation. The statute provides that family settlement agreements like this one are binding on all parties but may not “in any way 770 impair the rights of creditors or of taxing authorities.” A family settlement agreement is a transfer of property rights between parties other than the decedent 771 that takes place after a death. Inheritance tax, however, is based on the 772 transfers that take place at death from the decedent to the beneficiaries. A family settlement agreement cannot change the way that inheritance tax is 773 calculated. The Tax Court reversed the probate court’s judgment that the statute did not apply and remanded the case for recalculation of the inheritance tax due. 774 775 3. Estate of Dunnick v. Indiana Department of State Revenue. —The estate initiated an action on April 1, 2005, in response to a probate court order denying 776 a marital deduction for all assets transferred to the decedent’s wife. At his 777 death, the decedent was married, with three sons from a prior marriage. The wife was not a beneficiary of the decedent’s will or of an inter vivos trust that he 778 had created before their marriage. She filed a petition for her statutory 779 allowance and an election to take against the will with the probate court. The estate objected to the petitions, claiming that a prenuptial agreement barred the 780 wife’s claims against the estate. The estate reached a settlement with the wife 781 who then withdrew her election claims. Under the terms of the settlement, the wife received more than twice as much as she would have received if she had 782 pursued her statutory allowance and election to take against the will. The estate filed an amended inheritance tax return that treated the entire amount 783 transferred to the wife as non-taxable because of the marital deduction. The DOR filed a Petition for Rehearing, Reappraisement and Redetermination of Inheritance and Transfer Tax, arguing that any settlement could not impair its 768. Id. 769. Id. at 1085-86. 770. Id. at 1085 (quoting IND. CODE § 29-1-9-1 (2004)). 771. Id. 772. Id. at 1085-86. 773. Id. at 1086. 774. Id. 775. 855 N.E.2d 1087 (Ind. Tax Ct. 2006). 776. Id. at 1090. 777. Id. at 1088. 778. Id. 779. Id. 780. Id. 781. Id. 782. Id. 783. Id.
2007] TAX LAW 1171 784 taxing ability pursuant to I.C. § 29-1-9-1. Therefore, the estate should have calculated its inheritance tax by including only the value of the assets that the wife would have received under her election claim in the marital deduction. 785 786 The estate appealed the order of the probate court. The estate challenged the probate court’s jurisdiction to hear the DOR’s petition claiming that it was not timely filed and that it failed to state specific grounds for requesting a 787 rehearing. The DOR filed its petition on a Monday, two days after the 788 calculated deadline, which fell on a Saturday. However, Indiana Trial Rule 6(A) extends deadlines that would otherwise end on a day when the courts are 789 closed to the following business day. The DOR filed its petition on the first business day after the end of the deadline period and it was therefore timely 790 filed. The Tax Court also held that the petition was not required to state specifically that the application of I.C. § 29-1-9-1 was at issue because the petition did give the estate sufficient notice that it would have to explain how it 791 calculated its inheritance tax obligation. The estate also challenged the applicability of I.C. § 29-1-9-1 to this case, claiming that the statute did not reach settlement agreements involving inter vivos trusts, prenuptial agreements, and 792 elections. However, the Tax Court found that the wife was attempting to 793 establish her rights to the estate as an heir, as listed in I.C. § 29-1-9-1(c). Such 794 settlement agreements cannot reduce the taxing authority of the DOR. The estate argued, in the alternative, that the wife’s elections could have reached the trust assets, so the settlement agreement actually increased the amount of tax that the DOR could collect because it reduced the amount of assets that were 795 transferred to the wife. The Tax Court could not address the issue of whether or not her elections could have reached the trust assets because the estate did not 796 raise the issue with the probate court. However, the Tax Court did note that avoiding a reduction in inheritance taxes was only one purpose of I.C. § 797 29-1-9-1. To argue that the statute would allow settlement agreements to alter the imposition of inheritance taxes as long as the taxes were increased would be 798 unjust and unfair to the taxpayers. The statute must apply equally to all 784. Id. at 1090. 785. Id. 786. Id. 787. Id. at 1091. 788. Id. 789. Id. 790. Id. 791. Id. at 1092. 792. Id. at 1093. 793. Id. 794. Id. 795. Id. 796. Id. at 1094 n.10. 797. Id. at 1094. 798. Id.
Page 1 and 2:
RECENT DEVELOPMENTS IN INDIANA TAXA
Page 3 and 4:
2007] TAX LAW 1105 at the end of mo
Page 5 and 6:
2007] TAX LAW 1107 24 personal and
Page 7 and 8:
2007] TAX LAW 1109 41 levy so that
Page 9 and 10:
2007] TAX LAW 1111 I.C. § 6-1.1-12
Page 11 and 12:
2007] TAX LAW 1113 86 to change a b
Page 13 and 14:
2007] TAX LAW 1115 I.C. § 36-7-30-
Page 15 and 16:
2007] TAX LAW 1117 1, 2006) to add
Page 17 and 18: 2007] TAX LAW 1119 a county auditor
Page 19 and 20: 2007] TAX LAW 1121 residential rent
Page 21 and 22: 2007] TAX LAW 1123 damages caused b
Page 23 and 24: 2007] TAX LAW 1125 219 sale or tran
Page 25 and 26: 2007] TAX LAW 1127 political subdiv
Page 27 and 28: 2007] TAX LAW 1129 by reorganizing
Page 29 and 30: 2007] TAX LAW 1131 D. Income Tax Be
Page 31 and 32: 2007] TAX LAW 1133 2006, the term
Page 33 and 34: 2007] TAX LAW 1135 324 325 uses the
Page 35 and 36: 2007] TAX LAW 1137 Interest accrues
Page 37 and 38: 2007] TAX LAW 1139 A county sheriff
Page 39 and 40: 2007] TAX LAW 1141 386 years 2006 a
Page 41 and 42: 2007] TAX LAW 1143 I.C. § 6-2.5-6-
Page 43 and 44: 2007] TAX LAW 1145 biodiesel and bl
Page 45 and 46: 2007] TAX LAW 1147 included in the
Page 47 and 48: 2007] TAX LAW 1149 A. Wayne County
Page 49 and 50: 2007] TAX LAW 1151 C. Bonney v. Ind
Page 51 and 52: 2007] TAX LAW 1153 523 named respon
Page 53 and 54: 2007] TAX LAW 1155 549 infrastructu
Page 55 and 56: 2007] TAX LAW 1157 presumption that
Page 57 and 58: 2007] TAX LAW 1159 603 the assessed
Page 59 and 60: 2007] TAX LAW 1161 631 they subject
Page 61 and 62: 2007] TAX LAW 1163 661 jurisdiction
Page 63 and 64: 2007] TAX LAW 1165 Beach’s attorn
Page 65 and 66: 2007] TAX LAW 1167 721 12. O’Donn
Page 67: 2007] TAX LAW 1169 752 spouse. The
Page 71: 2007] TAX LAW 1173 814 adjusted gro
show all

Recent Developments in Indiana Taxation - I.U. School of Law ...

You also want an ePaper? Increase the reach of your titles

Delete template?

Save as template?