Instructions For Form Rev-1500 - Pennsylvania Inheritance Tax Return Resident Decedent Page 19
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27The request must be accompanied by a statement of the dates of
the rate of tax cannot be established with certainty. This section
birth of each person, the duration of whose life may affect the
is applicable only if a contingency makes it impossible on the
value of the interest, and copies of the relevant instruments. For
date of death of a decedent to determine the rate of tax which
Charitable Remainder Unitrusts and Pooled Income Funds, the
will apply when a future interest vests in possession and enjoy-
factor to compute the interest of a beneficiary is calculated in
ment. A compromise request is not necessary if all potential ben-
accordance with the methods described in US Tr e a s u r y
eficiaries are taxable at the same rate, and the only uncertainty is
Department regulations.
the identity of the ultimate beneficiary of a future interest.
SCHEDULE L-2
The following examples illustrate situations in which compro-
REMAINDER PREPAYMENT ELECTION
mise determinations apply:
-CREDITS-
Example 1 - (a) Date of death after December 12, 1982 and
SCHEDULE L-1
before January 1, 1995 - Decedent bequeathed the residue of his
REMAINDER PREPAYMENT ELECTION
estate to his trustee, in trust, and directed payment of income to
-ASSETS-
his wife, age 65, for life. Upon her death, the remainder will be
SCHEDULE L
distributed to decedent's son, age 38 at decedent's death, provid-
REMAINDER PREPAYMENT OR
ed he survives the decedent's wife. If the son does not survive the
INVASION OF TRUST PRINCIPAL
wife, the remainder is to be distributed to charity. This estate
qualifies for a compromise determination since it is uncertain at
the time of the decedent’s death whether the remainder will pass
to a taxable beneficiary or to a tax exempt charity.
(b) Date of death on or after January 1, 1995 - Since the trust
qualifies as a Section 9113 trust, the estate qualifies for a com-
promise determination only if the estate elects under Section
9113(a) to have the trust or portion of the trust subjected to tax
in the decedent’s estate. If an election is made, then the value of
the interest passing to the spouse will be subject to tax at the 0%
rate and the future interest uncertainty would be the amounts
available to pass at either the rate for the son or exempt to the
charity.
If a Schedule O election is not made, then the entire value of the
trust will not be subject to tax in the current decedent’s estate but
rather will be valued at the death of the surviving spouse and be
subject to tax as though the transfer were made by the surviving
spouse at the tax rates in effect at the death of the surviving
spouse or at the original testator’s date of death, whichever is
Schedules L, L-1 and L-2 are used to report invasions of princi-
less.
pal and elections to prepay tax on remainder interests in estates
of decedents who died on or before December 12, 1982. For
Example 2 - Decedent bequeathed the residue of her estate to
additional information contact the:
her trustee, in trust, and directed payment of income to her sis-
BUREAU OF INDIVIDUAL TAXES
ter, age 87 at decedent’s death, for life. Trustee is authorized to
INHERITANCE TAX DIVISION
invade principal for sister’s health, maintenance and support.
SPECIALTY TAX UNIT,
Upon her death, the remainder, if any, will be distributed to char-
PO BOX 280601
ity. This estate qualifies for a compromise determination because
HARRISBURG, PA 17128-0601
the trustees may invade principal for the benefit of the life ten-
ant, thereby affecting the value of the remainder interest which
SCHEDULE M
may ultimately pass to charity.
FUTURE INTEREST COMPROMISE
Example 3 - Decedent’s will creates two trusts for the benefit of
the surviving spouse. The first trust (TRUST A) provides for
income payable to the spouse for life with the remainder payable
to issue at the spouse’s death. The second trust (TRUST B) also
provides for income payable to the spouse for life, principal
payable at the trustee’s discretion, if needed, for support of the
surviving spouse and also for the support and education of issue,
after consideration of all other available resources, with the
remainder to pass to issue at the death of the surviving spouse.
In this example, TRUST A is not subject to future interest com-
promise tax since the value of the spouse’s interest can be deter-
mined by the use of an actuarial calculation and would be tax-
able at the rate determined by the decedent’s date of death. (For
dates of death after December 31, 1994, TRUST A would be
includable only if it were subject to an election made by the
decedent’s estate under Section 9113(a).)
This schedule is appropriate only for estates of decedents dying
Since TRUST B is not for the sole use of the surviving spouse,
on or after December 13, 1982. Section 9116(e) of the
it cannot be considered a Section 9113 arrangement and, there-
Inheritance and Estate Tax Act of 1991 [72 P.S. § 9116(e)] effec-
fore, qualifies for a future interest compromise tax determina-
tive October 3, 1991 authorizes the Department of Revenue to
tion. The uncertainty to be resolved is whether trust principal
compromise the amount of tax payable on a future interest when
16
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