Response to NYS Department of Taxation & Finance Technical Memorandum addressing the treatment, for NYS estate tax purposes, of certain deductions allowable under Federal law for funeral and estate administration expenses

SUMMARY 

The Estate and Gift Taxation Committee (Paul Ferrara, Chair) issued a report in response to New York State Department of Taxation and Finance Technical Memorandum TSB-M-15(4)(M), which addresses the treatment, for New York estate tax purposes, of certain deductions allowable under Section 2053 of the Internal Revenue Code—namely, funeral expenses, estate administration expenses, debts and other claims against property includable in a decedent’s gross estate. The Committee notes that the approach towards the allocation of deductions set forth in the Technical Memorandum disfavors New York residents relative to non-New York residents. To balance the equities, it argues that, for purposes of determining whether a deduction allowable under IRC Section 2053 relates to particular property for purposes of Sections 955 and 960(b) of the New York Tax Law, additional consideration should be given to the sources from which the amount giving rise to the deduction is properly payable under laws governing the administration of the decedent’s estate. Such consideration would give effect to the terms of the decedent’s will and other relevant dispositive instruments, and the extent to which those sources of proper payment include the property at issue.