STATE TAXES
Inheritance Tax
The inheritance tax law was repealed as the result of the passage of Proposition 6 at the California election held
on June 8, 1982. The new estate law (below) is effective for estates of decedents who died after January 1,
1987.
Gift Tax
The gift tax law was also repealed as the result of the passage of Proposition 6 at the California election held on
June 8, 1982. The repeal is effective as to all gifts made after June 7, 1982.
Estate Tax
Proposition 6 also enacted the California estate tax. The purpose of this tax is to take advantage of a provision
in federal law which allows the estate to claim a credit against the federal estate tax for death taxes paid to the
state. The tax is fixed in the maximum amount that the federal government will allow as a credit for estate taxes
paid to the state. Therefore, this tax does not cost the estate anything because if the amount were not paid to the
state it would have to be paid to the federal government.
A California Estate Tax Return is required to be filed with the State Controller for the estate of every decedent
whose date of death is after January 1, 1987, if a Federal Estate Tax Return is required to be filed. The return is
due and any tax liability is payable on or before nine months after the date of death. There is a late filing
penalty of 5% of the amount of the tax due for each month or portion thereof up to a maximum of 25%. This
penalty can be waived for good cause. If an extension to file has been granted by the Internal Revenue Service
for the filing of the Federal Estate Tax Return, a like extension will be given for the California return. In
addition to the late filing penalty, interest at the rate of 12 percent per annum is chargeable on payments not
made within nine months after the decedent’s death.