3.8.3.8

CALCULATION OF CREDIT FOR TAX PAID OTHER STATE; EXAMPLES

1. A. The following examples illustrate the application of Section 7-7-3 NMSA 1978. The federal credit in each case is determined by reference to federal law. All other figures are hypothetical.

2. B. Example 1: T is a New Mexico decedent. T's gross estate is $1,750,000; T has $140,000 in deductions. Thus the taxable estate is $1,610,000. $175,000 of T's estate is real property located in state X, where it is taxed. State X does not have a reciprocal provision allowing this amount to be taxed in New Mexico.

   (1) Under Section 7-7-3(B)(1) NMSA 1978 (“method 1”), it is determined that the amount of estate tax paid to state X on $175,000 is $2,040. This is the amount of credit for method one. (State X's statute does not tax to the full measure of its proportional share of the federal credit.)

   (2) Under Section 7-7-3(B)(2) NMSA 1978 (“method 2”), the calculation is: Total credit for T's taxable estate times the quotient of the value of the property in state X divided by the value of the gross estate; that is,

   $71,520 x 175,000 = $7,152

   1,750,000

   (3) The credit allowed in this situation against New Mexico tax due is equal to the smaller of the above two amounts, calculated under methods 1 and 2. The credit against the $71,520 owed to New Mexico would, therefore, be $2,040.

3. C. Example 2: Same facts as in Example 1, except $1,400,000 of T's gross estate is real property located in and taxed by state X. Method 1 results in $61,840 credit. Method 2 results in $57,216 credit ($71,520 x 8/10). The amount credited against New Mexico tax due is $57,216, because the amount in this case is less using method 2.

   [8/5/74, 9/15/88, 7/15/96; 3.8.3.8 NMAC - Rn & A, 3 NMAC 8.3.8, 12/14/00]

   HISTORY OF 3.8.3 NMAC:

   Pre-NMAC History: The material in this part was derived from that previously filed with the State Records Center:

   BOR 70-1, (Inheritance Tax Reg. 2-1), Accrual of Interest During Probate Court’s Extension of Time for Payment of Inheritance Tax, filed 3/5/70.

   BOR 71-6, Regulation for Inheritance Tax Act, filed 12/20/71.

   BOR 73-2, Regulations in Effect and Pertaining to the New Mexico Inheritance Tax Act, filed 4/4/73.

   BOR 74-3, Regulations in Effect and Pertaining to the New Mexico Estate Act, filed 8/5/74.

   TRD Rule 7-88, Regulations Pertaining to the New Mexico Estate Tax Act, Sections 7-7-1 to 7-7-20 NMSA 1978, filed 9/15/88.

   History of Repealed Material: [RESERVED]

   NMAC History:

   3 NMAC 8.3, Credit for Tax Paid to Other State, filed 7/2/96.

   3.8.3 NMAC, Credit for Tax Paid to Other State, filed 12/1/00.