INSTRUCTIONS FOR FORM REV-1500 PENNSYLVANIA

REV-1501 EX (4-97) (I)

INSTRUCTIONS FOR FORM REV-1500

PENNSYLVANIA INHERITANCE TAX RETURN

RESIDENT DECEDENT

A MESSAGE FROM THE SECRETARY...

The Department of Revenue is actively participating in Governor Ridge’s PRIME initiatives designed

to make state government more customer-oriented, cost efficient, and competitive, one of which is

imaging tax returns. As part of the PRIME initiative to improve services to the survivors of

Pennsylvania decedents, the Inheritance Tax Division has recently revised the REV-1500,

Inheritance Tax Return to meet the criteria for imaging, an innovative method of storing and

retrieving records.

This comprehensive instruction booklet is designed to provide the information necessary to complete

the new Pennsylvania Inheritance Tax Return for the estates of most resident decedents.

Unnecessary paperwork, such as Schedule O, has been eliminated for many estates. The revised

tax return is available from any Department of Revenue district office or your local Register of Wills.

You can also access forms, instructions, and news from the Department at our “Cyberspace District

Office”. Our Internet address is http://www.revenue.state.pa.us, and our E-mail address is:

[email protected].

Review the preface inside for a quick look at recent developments regarding Inheritance Tax issues.

As noted, Governor Ridge has, through legislation, reduced the spousal or “widow’s tax” rate to zero

thereby eliminating this onerous tax burden for spouses. The Inheritance Tax Division has renewed

their commitment to providing expedient service and will be happy to answer any questions you may

have. You can reach them at (717) 787-8327, or send a fax to (717)772-0412.

COMMONWEALTH OF PENNSYLVANIA

DEPARTMENT OF REVENUE

PREFACE

Since the enactment of Act 21 of 1995, which reduced the spousal tax rate to zero, many tax

return preparers have contacted the Inheritance Tax Division with questions about preparing

the tax return now that the “widows’ tax” has been repealed. Technically speaking, the

transfer of property to a surviving spouse is not exempt, but the tax rate has been reduced

to zero, so that, effectively, no tax is required to be paid. The statute still requires the

disclosure of assets of a taxable nature on a tax return, and Line 15 of the cover sheet is

used to indicate the transfer to the surviving spouse at the zero tax rate.

In order to eliminate unnecessary paperwork, Schedule O should only be filed when the

estate representative elects to include the value of a qualified Sec. 9113 trust as a taxable

transfer in the estate of the first spouse to die. Schedule O need not be filed if the estate

representative intends to postpone payment of the tax until the death of the surviving spouse.

Schedule J should be used to remove a qualified nonelected trust from the tax computation.

The revised Schedules O & J are available from any Department of Revenue district office

or from your local Register of Wills.

Other items to note:

• The Inheritance Tax Return forms, (REV-1500, Resident Decedents, or REV-1737

Nonresident Decedents), can be used for all estates, regardless of the date of death of

the decedent.

• Since January 1, 1997, the Department requires prepayment of a fee for certain types

of assistance in the valuation of assets.

• Since February 16, 1997, the Department of Revenue applies all payments (excluding

those made for probate fees or local costs) to the tax liability first, with the remaining

portion of the payment applied to any interest, penalty, or legal costs which may be

assessed.

• Due to the enactment of Act No. 168 of 1996, Section 6411 has been added to the

Probate, Estate and Fiduciaries Code. This section requires the reporting of securities

held by a decedent in a trust or any form which includes the designation of a

beneficiary to the Department of Revenue for Inheritance Tax purposes. In order to

comply, you must file a return and pay the tax prior to the transfer. If that is not

possible, you may also receive a waiver/consent from the Department of Revenue prior

to the transfer, or simply provide written notice of the transfer to the Department within

ten days of the transfer. The latter two options for compliance can be accomplished by

using form REV-516 to request a waiver or provide the appropriate notice within ten

days. Form REV-516 can be obtained as indicated in SECTION 7, ORDERING

FORMS, in the first part of this booklet.

TABLE OF CONTENTS

GENERAL INFORMATION

Page

Number

1. STATUTES AND GENERAL DESCRIPTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

2. TAXABLE PROPERTY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

3. TAXABLE TRANSFERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

4. DEDUCTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

5. TAX RATES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

6. SPOUSAL POVERTY CREDIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

7. ORDERING FORMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

8. WHO MUST FILE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

9. WHEN TO FILE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

10. SUPPLEMENTAL RETURN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

11. SUPPLEMENTAL DOCUMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

12. ADDITIONAL VERIFICATION OR DOCUMENTATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

13. WHERE TO FILE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

14. FILING A FALSE RETURN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

15. PAYMENT OF TAX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

16. INTEREST AND PENALTY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

17. REFUND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

18. FAILURE TO PAY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

19. APPRAISEMENT, ALLOWANCE OR DISALLOWANCE OF DEDUCTIONS AND

ASSESSMENT OF TAX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

20. ADMINISTRATIVE CORRECTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

21. PROTEST, NOTICE OR APPEAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

22. PENNSYLVANIA ESTATE TAX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

23. CITATION PROCEDURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

24. VALUATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

REV 1500 COVER SHEET INSTRUCTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

TYPE OF RETURN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

CORRESPONDENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

RECAPITULATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

TAX COMPUTATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

TAX PAYMENTS AND CREDITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

INSTRUCTIONS FOR SCHEDULES Page

Number

SCHEDULE A REAL ESTATE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

SCHEDULE B STOCKS AND BONDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

SCHEDULE C CLOSELY-HELD CORPORATION, PARTNERSHIP OR SOLE-PROPRIETORSHIP . . . . . . . . . . . 10

SCHEDULE D MORTGAGES AND NOTES RECEIVABLE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

SCHEDULE E CASH, BANK DEPOSITS AND MISCELLANEOUS PERSONAL PROPERTY . . . . . . . . . . . . . . . . 11

SCHEDULE F JOINTLY-OWNED PROPERTY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

SCHEDULE G INTERVIVOS TRANSFERS & MISCELLANEOUS NON-PROBATE PROPERTY . . . . . . . . . . . . . 12

1. IRA’S, ANNUITIES AND PENSION PLANS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

2. TRANSFERS MADE WITHIN ONE YEAR OF DECEDENT’S DEATH . . . . . . . . . . . . . . . 13

3. RETAINED REVERSIONARY INTEREST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

4. TRANSFERS IN WHICH THE DECEDENT RETAINED A LIFE INTEREST . . . . . . . . . . . 13

5. PROMISES BY TRANSFEREE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

6. REVOCABLE AND TENTATIVE TRUSTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

SCHEDULE H FUNERAL EXPENSES & ADMINISTRATIVE COSTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Part A FUNERAL AND BURIAL EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Part B ADMINISTRATIVE COSTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

SCHEDULE I DEBTS OF DECEDENT, MORTGAGE LIABILITIES AND LIENS . . . . . . . . . . . . . . . . . . . . . . . . . 15

SCHEDULE J BENEFICIARIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

SCHEDULE K LIFE ESTATE, ANNUITY, AND TERM CERTAIN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

SCHEDULES

( L, L-1, AND L-2) REMAINDER RETURNS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

SCHEDULE M FUTURE INTEREST COMPROMISE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

SCHEDULE N SPOUSAL POVERTY CREDIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

SCHEDULE O ELECTION TO TAX UNDER SEC. 9113(A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

REGISTER OF WILLS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

REVENUE DISTRICT OFFICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

INTERNET ADDRESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

E-MAIL ADDRESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

1. STATUTES AND GENERAL DESCRIPTION

The Pennsylvania Inheritance Tax is imposed by the

Inheritance and Estate Tax Act of 1991, which applies to

estates of decedents who died on or after October 3,

1991. The 1991 Act [72 P.S. § 9101 et seq.] was

amended in 1994, for estates of decedents who died on

or after July 1, 1994 and again in 1995 for estates of

decedents who died on or after January 1, 1995. The

PA Inheritance Tax was previously imposed by the

Inheritance and Estate Tax Act of 1961, which applies to

estates of decedents who died between January 1,

1962, and December 13, 1982. The law was amended

by Act 255 of 1982, which applies only to estates of

decedents who died between December 13, 1982, and

October 3, 1991. Information on applicability of Inheri-

tance Tax to estates of decedents who died before

January 1, 1962, can be obtained from the Department

of Revenue, Bureau of Individual Taxes.

Inheritance Tax is a tax on the right of succession or

privilege of receiving property at a death, and it is

imposed upon the transfer of taxable property. The net

value subject to tax is determined by subtracting from

the value of the gross estate the amount of approved

deductions.

2. TAXABLE PROPERTY

All real property and all tangible personal property

located within the Commonwealth of Pennsylvania is

taxable, as is all intangible personal property of a

resident decedent regardless of where it is located.

A contract to sell any real property or any tangible person-

al property located outside the Commonwealth of

Pennsylvania owned by a resident decedent makes

such property taxable, provided the jurisdiction where

the property is located does not subject it to Inheritance

Tax.

Other taxable assets include non-Pennsylvania lottery

winnings, survival action proceeds, certain retirement

benefits, IRAs, annuities, “in trust for” bank accounts,

jointly-owned assets, and living trusts. The designation

of a beneficiary in the event of the death of an owner

allows for the transfer of ownership of some assets

without formal probate. However, these assets are still

subject to Inheritance Tax.

In the event that the current decedent is the beneficiary

of a trust created by a predeceased spouse who died

on or after January 1, 1995, and in whose estate no

election to tax under Section 9113 had been made to

pay tax on such trust, then the assets may be subject to

tax and should be reported on Schedule G. Refer to the

instructions for Schedule O for further information.

3. TAXABLE TRANSFERS

The tax is imposed on inter vivos transfers, transfers of

taxable property by will, other testamentary instrument,

or by intestacy.

Property, including but not limited to real estate, securi-

ties, and bank accounts in two or more names (except

husband and wife) with right of survivorship is taxable

even if the joint tenancy had been created by the sur-

vivor (see instructions for Schedule F). In addition, the

tax is imposed on certain inter vivos transfers (see

instructions for Schedule G).

The relinquishment of a retained power to alter, amend,

or revoke an inter vivos transfer done within one (1)

year of the death does not prevent the inclusion of the

property which was subject to that power in the taxable

estate.

If a decedent died after December 12, 1982, a transfer

made within one (1) year of the death of the decedent,

if made without valuable and adequate consideration in

money or money’s worth at the time of the transfer, is

taxable.

For those decedents dying on or before December 12,

1982, a transfer made within two (2) years of the death

of the decedent, if made without valuable and adequate

consideration, is taxable.

It is important to note that property which was subject

to a life interest retained by a decedent is taxable and

must be reported on Schedule G at its full date of death

value. Retained life interests may be evidenced by

explicit specific reference in the instrument of

transfer or determined to be implied by the nature of

the transaction.

4. DEDUCTIONS

Funeral and burial expenses, the family exemption

(where applicable), administration expenses, and debts

of the decedent are all valid deductions. When the tax

is imposed upon a transfer of jointly owned property by

right of survivorship (see instructions for Schedule F) or

a taxable inter vivos transfer (see instructions for

Schedule G), the transferee must establish actual pay-

ment of deductible items and either the legal obligation

to pay items or that the estate, subject to administration

by the personal representative, is insufficient to pay the

deductible items.

5. TAX RATES

Inheritance Tax is generally payable at the rate of 6%

(Class A) or 15% (Class B). The tax rate for transfers to

a surviving spouse is controlled by the statute in effect

at the decedent’s date of death. [See 5(a) below].

Classes depend on the relationship of the beneficiary to

the decedent.

Class A: Grandfather, grandmother, father, mother,

husband [see 5(a) below], wife, [see 5(a) below],

children, wife or widow and husband or widower of a

child, and lineal descendants. “Children” includes

natural children whether or not they have been

adopted by others, adopted children and stepchildren.

“Lineal Descendants” includes all children of the

natural parents and their descendants, whether or not

they have been adopted by others, adopted descen-

dants and their descendants, and step-descendants.

(For descendants of stepchildren, see special note after

Class B. For natural children adopted by others, see

special note after Class B.)

Class B: Includes all beneficiaries other than those in

Class A (except charitable organizations, exempt insti-

tutions, and government entities which are exempt from

tax).

Special Note - Descendants of Stepchildren:

For estates of decedents dying on or after December

13, 1982, stepchildren and their descendants are

considered Class A beneficiaries and are taxable at the

6% tax rate. For estates of decedents dying before

December 13, 1982, descendants of stepchildren are

not included in the definition of lineal descendants and

are taxable at the rate for Class B beneficiaries.

Special Note - Natural Children Adopted by Others:

For estates of decedents dying on or after October 3,

1991, natural children adopted by others are consid-

ered Class A beneficiaries in the estates of both the nat-

ural parents and the adoptive parents and are taxable

at the 6% rate. For estates of decedents dying before

October 3, 1991, natural children adopted by others are

not included in the definition of lineal descendants and

are taxable at the rate for Class B beneficiaries in the

estate of the natural parents, but are included in the

adopting parents’ estates as Class A beneficiaries.

5.(a) SPOUSAL TAX RATES

The rate of tax for transfers to a surviving spouse is

dependent on the statute in effect as of the decedent’s

date of death. The applicable rates and effective dates

are:

Dates of Death Rate

Prior to July 1, 1994, . . . . . . . . . . . .6%

July 1, 1994

through

December 31, 1994 . . . . . . . . . . . . .3%

January 1, 1995, and after . . . . . . . .0%

6. SPOUSAL POVERTY CREDIT

A credit is available for estates of decedents dying on or

after January 1, 1992, and before January 1, 1995, for

transfers made to the surviving spouse if certain criteria

are met. First, the transferee must be the decedent’s

spouse on the date of death. Second, the value of the

decedent’s estate reduced by actual liabilities must not

exceed $200,000. Third, the average of the joint exemp-

tion income of the decedent and spouse for the three

years prior to the de-cedent’s death must not exceed

$40,000 annually.

The credit is calculated up to the first $100,000 of net

taxable transfers to the surviving spouse. The credit is

2% for decedents dying January 1, 1992, through

December 31, 1992, 4% for decedents dying January 1,

1993, through December 31, 1993, and 6% for dece-

dents dying on or after January 1, 1994, but prior to July

1, 1994.

As a result of the reduced rate of tax for transfers to

spouses, the credit cannot exceed the tax imposed. The

credit available is 3% for estates of decedents who died

from July 1, 1994 through December 31, 1994. The

credit is not available for estates of decedents who died

on or after January 1, 1995.

The credit is claimed by checking Block 10 in the upper

right hand corner of the cover sheet of the return and fil-

ing a completed Schedule N. See specific instructions

for Schedule N. Failure to check Block 10 could result in

the denial of the credit.

7. ORDERING FORMS

In general, forms and schedules may be obtained at the

of the Department of Revenue offices listed in

the back of this book. You may order any

Pennsylvania tax form or schedule by calling the 24-

hour answering service numbers for forms order

ing:1-800-362-2050; or within the local Harrisburg

area,call (717) 787-8094. TTY/TDD users only may

call (717) 772-2252. Large quantities of forms must be

ordered by written request from: PA Department of

Revenue, Bureau of Administrative Services, Tax

Forms Service Unit, 711 Gibson Boulevard, Harrisburg,

PA 17104-3200. Forms and schedules are

also available on the Internet at http://www.

revenue.state.pa.us.

8. WHO MUST FILE

An Inheritance Tax return must be filed for every dece-

dent who has property which is or may be subject to

tax. You must file a return if you are:

(a) The personal representative of the decedent’s

estate. The return must disclose property of the dece-

dent administered by the personal representative and

additional property, which is or may be subject to Inher-

itance Tax, of which the personal representative

has or acquires knowledge.

(b) The transferee of property, if no personal repre-

sentative is appointed or if the personal representative

does not file a return, or if the personal representative

files a return but does not include the subject property.

A “transferee”means any person to whom a transfer is

made and includes legatees, devisees, heirs, next of

kin, grantees, beneficiaries, vendees, assignees,

donees, surviving joint tenants, and insurance benefi-

ciaries. The return must disclose any property or any

interest therein or income therefrom in possession or

enjoyment, present or future, in trust or otherwise

which passes ownership to the transferee. No sepa-

rate transferee return is required for property included

in a personal representative’s return.

The inclusion of property in the return does not consti-

tute an admission that its transfer is taxable.

9. WHEN TO FILE

File as soon as possible after the decedent’s death,

but not later than nine (9) months from the decedent’s

death. Failure to file may subject the estate to a penal-

ty of 25% of the tax ultimately found to be due or

$1,000, whichever is less. If the return cannot be filed

when due, an extension of time to file can be request-

ed from the Department of Revenue. The extension

request should include an estate file number as

assigned by the Register of Wills, if available. The

extension request must be made before the return is

due, and should be mailed to:

PA Department of Revenue

Bureau of Individual Taxes

Inheritance Tax Division-EXT.

Dept. 280601

Harrisburg PA 17128-0601

The Department’s granting of an extension to file does

not relieve the estate from payment of interest which

will accrue beginning nine (9) months and one (1) day

from the decedent’s death on any tax ultimately found

to be due and not timely paid.

The extension request must document the basis for an

extension. Extensions will be granted for events

beyond the control of the estate such as litigation over

assets and will disputes. Extensions are not granted

for events within the control of the estate such as a

failure to collect the information needed to complete

the return.

10. SUPPLEMENTAL RETURN

A personal representative or transferee who acquires

knowledge of additional assets, transfers or deduc-

tions at any time after the original return has been filed

must promptly file a supplemental return.

The supplemental return should include only the

additional assets, transfers or deductions. A sup-

plemental return may not be used to adjust or

correct a previously filed return.

Errors contained in an assessed return must be

resolved by one of the procedures outlined in para-

graphs 17, 20, or 21 of this section of the booklet.

It is important to note that it is not possible to file

an amended Inheritance Tax return. When the value

of an asset or deduction has been established by

assessment notice from the Department, any discrep-

ancy must be resolved through either the refund

process outlined in paragraph 17, or through the

appeal process discussed in paragraph 21 of this

section of the booklet.

11. SUPPLEMENTAL DOCUMENTS

If the decedent died testate or had maintained an inter

vivos trust, a copy of the will and/or trust document

must be submitted with the return. See instructions for

each schedule for other documents to be submitted

with the return.

12. ADDITIONAL VERIFICATION OR

DOCUMENTATION

Additional verification or documentation on certain

assets or deductions may be required by the

Department of Revenue to complete the review of this

form. The Department will request by letter the infor-

mation needed. Failure to provide the information will

result in a delay of the processing of the return, or in

the issuance of an unfavorable assessment.

Any supplemental information which the estate repre-

sentative considers confidential should be submitted

directly to the PA Department of Revenue, Bureau of

Individual Taxes, Dept. 280601, Harrisburg, PA 17128-

0601, with a statement that the documents are not part

of the public record. Confidential documents need not

be attached to the return filed with the Register of

Wills.

13. WHERE TO FILE

The return is to be filed in duplicate, with the Register

of Wills of the county in which the decedent was a res-

ident at the time of death. (See page 23 for the

addresses of the Registers of Wills.)

14. FILING A FALSE RETURN

Any person who willfully makes a false return or report

commits a misdemeanor of the third degree.

15. PAYMENT OF TAX

The tax assessed on the transfer of the property report-

ed in the return is payable within nine (9) months after

the decedent’s death. The granting of an extension of

time to file the tax return does not extend the time for

payment of the tax ultimately found to be due.

If tax is paid within three (3) calendar months after the

decedent’s death, a 5% discount will be allowed on the

actual tax paid within the time period. A discount is not

allowed on any amount which may be subsequently

refunded.

All checks must be made payable to: “Register of Wills,

Agent” and presented to the Register of Wills of the

county where the decedent resided.

The Commonwealth places no limitation on tax liability

until a proper and complete return is made and the

return is assessed by the Department of Revenue.

16. INTEREST and PENALTY

Interest is charged beginning with first day of delin-

quency, or nine (9) months and one (1) day from the

date of death, to the date of payment. Taxes which

became delinquent before January 1, 1982, bear inter-

est at the rate of six (6%) percent per annum, calculat-

ed at a daily rate of .000164. All taxes which became

delinquent on and after January 1, 1982, will bear inter-

est at a rate which will vary from calendar year to

calendar year with that rate announced by the PA

Department of Revenue. The applicable interest rates

for 1982 through 1997 are shown on the chart below.

Interest rates for subsequent years can be obtained

from the Register of Wills or any Revenue District

Office.

Year Percent Daily Rate

1982 20% .000548

1983 16% .000438

1984 11% .000301

1985 13% .000356

1986 10% .000274

1987 9% .000247

1988 through 1991 11% .000301

1992 9% .000247

1993 and 1994 7% .000192

1995 through 1997 9% .000247

For estates of decedents who died on or before March

31, 1993, a penalty for nonparticipation in the Tax

Amnesty program will be due if the tax and interest were

unpaid, unreported or underreported before the end of

the Tax Amnesty period. A penalty of fifteen (15) per-

cent of the total balance due as of January 17, 1996, is

imposed on all liabilities not paid in full before January

18, 1996. All payments received before February 16,

1997, must first be applied to any penalty, legal costs or

interest which may be due, with any remainder of the

payment applied to the tax balance. All payments made

on or after February 17, 1997 will be applied to any tax

due first, with any remainder of the payment applied to

interest, penalty, or legal costs.

17. REFUND

A refund will be made of any tax to which the

Commonwealth is not rightfully or equitably entitled,

providing the Commonwealth determines the refund is

due. The application for refund of payment made prior

to January 1, 1998 must be made within two (2) years

after the date of payment, the date of the notice of

assessment, or the date the tax becomes delinquent,

whichever is later. (Consult Section 9181(d) of the 1991

Act, as amended, for refund limitations.) For payments

made after December 31, 1997, the application for

refund period has been extended to three(3) years.

(Consult Section 9181(d) of the 1991 Act, as amended

by Act 7 of 1997).

If tax is overpaid when the return is filed, a refund can

be requested by placing a check mark in the “Refund

Requested” block at Line 19 of the return. If this block is

checked, the estate is not required to submit a separate

application for refund. A refund check will be issued by

the Department as soon as the return processing is

completed.

If the refund block at Line 19 of the return was not

checked when the tax return was filed, an “Application

for Refund of Pennsylvania Inheritance/Estate Tax”

(form REV-1313) must be filed to request a refund of an

existing tax credit reflected on an official assessment

notice. Refund applications should be directed to:

PA Department of Revenue

Bureau of Individual Taxes

Inheritance Tax Division-REF

Dept. 280601

Harrisburg, PA 17128-0601

Should you believe that a refund is due as the result of

an issue which had not previously been raised, and

where the statutory appeal provisions of Section

9186(a) of the 1991 Act, as amended, have expired, a

petition for refund may be filed with the Board of

Appeals provided that all tax, penalty, and interest

which have been assessed are paid in full. The request

should be made using the Board of Appeals “Petition”

(form REV-65) and should be directed to:

PA Department of Revenue

Board of Appeals

Dept. 281021

Harrisburg, PA 17128-1021

The Board of Appeals does not accept facsimile, or fax

copies of petition forms. The estate may appeal a

decision on a petition for refund.

18. FAILURE TO PAY

The taxes imposed, together with any interest thereon,

constitute a lien upon real property which remains in

effect until the taxes and interest are paid in full. There

is no statute of limitations for collection of Inheritance

Tax.

19. APPRAISEMENT, ALLOWANCE OR DIS-

ALLOWANCE OF DEDUCTIONS AND

ASSESSMENT OF TAX

After a return is filed, the Department of Revenue

issues a notice setting forth its valuation of the estate

assets, allowable deductions and inheritance tax due.

The Department uses a series of Assessment Control

Numbers (ACNs) to identify and separate tax liabilities

imposed under sections of the law:

ACN 101 represents the tax due on the Inheritance Tax

return (REV-1500) filed by the personal representative

or transferee of property.

ACNs 102-199 represent the tax due on a future inter-

est compromise tax determination or the remainder tax

due for estates of decedents who died prior to

December 13, 1982.

ACN 201 represents Pennsylvania Estate Tax due

based on the Federal Estate Tax Return (Form 706).

ACN 202 represents any additional Pennsylvania

Estate Tax due resulting from any changes to the

Federal liability as reflected on the Estate Tax closing

letter received from the Internal Revenue Service.

ACNs 501 to 599 represent the tax due on the proceeds

of litigation received more than nine (9) months after the

date of death.

Notices of potential tax liabilities based on the existence

of jointly held or trust assets are identified through the

use of an eight (8) digit number beginning with the two

digits representing the year in which the notice is origi-

nally issued. For example, all notices issued in 1997 will

be numbered 97000001, 97000002, etc.

Further information concerning the ACN system can be

obtained by contacting the Inheritance Tax Division

Inquiry Unit at (717) 787-8327.

20. ADMINISTRATIVE CORRECTIONS

Obvious factual errors discovered on the assessment

may be corrected administratively. Examples of

administratively correctable errors include those made

by transposition of figures, mathematical errors, miscal-

culations, and obvious duplication of assets. The estate

must report such errors to the Department of Revenue

by a letter which identifies the alleged error, and the

proposed correction, together with any documentation

which supports the need for an adjustment to the

record. Requests for administrative correction should

be directed to:

PA Department of Revenue

Bureau of Individual Taxes

Post Assessment Review Unit

Dept. 280601

Harrisburg, PA 17128-0601

All other errors must be resolved in accordance with

either the guidelines outlined in paragraph 21 below, or

by the payment of tax, penalty, and interest and the

filing of a Petition for Refund with the Board of Appeals

as indicated in paragraph 17.

21. PROTEST, NOTICE, OR APPEAL

A taxpayer or any party in interest, including the

Commonwealth, not satisfied with the appraisement,

allowance or disallowance of deductions, assessment

of tax (including discount or interest), or any other

matter relating to the tax imposed may object by taking

any of the following actions WITHIN SIXTY (60) DAYS

of receipt of the notice to which objection is made:

(a) File a written protest specifying all objections with:

PA Department of Revenue

Board of Appeals

Dept. 281021

Harrisburg, PA 17128-1021

The Board of Appeals does not accept facsimile, or

fax copies of petition forms.

(b) Notify the Register of Wills in writing that you elect

to have the correctness of the Department’s action

determined at the “audit of the account” of the personal

representative. A copy of this election must be sent to:

PA Department of Revenue

Office of Chief Counsel

Dept. 281061

Harrisburg, PA 17128-1061

Orphans’ Court Division to have the correctness of the

Department’s action determined at the “audit of the

account” of the personal representative or at such time

as the court shall fix. A copy of the appeal must be sent

to:

PA Department of Revenue

Office of Chief Counsel

Dept. 281061

Harrisburg, PA 17128-1061

22. PENNSYLVANIA ESTATE TAX

Estate Tax is due at the date of death and becomes

delinquent (9) months after the date of death, regard-

less of any extension granted for filing of the Federal

Estate Tax Return. Payment of Estate Tax is made to

the Register of Wills.

Note: For decedents dying prior to October 3, 1991,

the Estate Tax is due at the date of death and

becomes delinquent 18 months after the date of

death, regardless of any extension granted for filing

of the Federal Estate Tax Return.

The personal representative (executor or administrator)

or any other fiduciary responsible for filing the Federal

Estate Tax Return must also file a copy of that return

(Form 706) with the Register of Wills of the county in

which the decedent resided at the time of death. The

copy of the return must be filed within one month of the

filing of the Federal Estate Tax Return.

A copy of the final communication from the Federal

Government must also be filed with the Register of Wills

within 30 days of receipt. The Department of Revenue

will issue a Notice of Determination and Assessment of

Pennsylvania Estate Tax based on the federal closing

letter under ACN 202. Any tax due as a result of

changes made by the Federal Government on the final

communication becomes delinquent one month after

the date of the receipt of the final federal closing letter

by the estate.

For more information please request a copy of form

REV-229 “Pennsylvania Estate Tax - General Infor-

mation.”

23. CITATION PROCEDURE

The law provides for the filing of a citation with the Court

of Common Pleas, Orphans’ Court Division to compel

the filing of the tax return or the payment of tax. It may

be directed to the personal representative or transferee

and may commence (9) months after the date of death.

The citation process can result in an order directing fil-

ing and payment, a contempt citation, and ultimately,

additional fines and imprisonment for failure to comply

with the requirements of the Inheritance and Estate Tax

Act.

24. VALUATION

The general rule is that valuation is based on the fair

market value as of the decedent’s date of death. Special

rules apply to the valuation of life estates and future

interests created by a decedent. See the instructions for

Schedules K, L and M.

For estates of decedents dying on or after January 1,

1995, special rules exist for the valuation of a trust

established for the sole use of the surviving spouse

allowing for an election to subject the trust to taxation in

the donor’s estate. If an election is not made, then the

value of the trust will be determined as of the date of

death of the surviving spouse and will be subject to tax

as though it were a transfer from the surviving spouse.

See the instructions for Schedule O for further informa-

tion.

Special rules also apply to the valuation of farmland.

See the instructions for Schedule A. Further information

concerning the Special Farm Use Valuation can be

found in Section 9122 of the Inheritance and Estate Tax

Act or by contacting the Inheritance Tax Division’s

Specialty Tax Unit at (717) 787-8327.

It is important to note that Pennsylvania does not

have a six month alternate valuation date similar to

that found in the Internal Revenue Code.

REV-1500 COVER SHEET INSTRUCTIONS

The REV-1500 cover sheet of the Inheritance Tax

Return must include all information relevant to the

estate’s identification, certain characteristics of the

estate, the name and address of the person with whom

the Department of Revenue should correspond, the

recapitulation of the totals of the estate’s assets and

deductions, and the estate representative’s signature.

The decedent’s complete address must be entered on

the reverse side of the REV-1500. Questions on the

reverse side of the cover sheet must be answered.

Completion of the tax payments and credits portion is

optional.

The decedent information section on the front of the

REV-1500 should be completed by entering the

Department of Revenue file number, if available, the

decedent’s name, social security number, date of death

and date of birth, and the decedent’s surviving spouse’s

name and social security number. The following applic-

able estate characteristics must also be indicated on

the cover sheet:

TYPE OF RETURN

Block 1: Original Return - check this block if this is the

first return filed for this estate and no other asset or

deduction description has been previously submitted.

Block 2: Supplemental Return - check this block if this

return is being filed to report additional assets or

deductions not reported on a prior return.

Block 3: Remainder Return - check this block to report

a future interest under a prior limited estate. This return

is filed either at the time the remainderman exercises

the option to prepay or at the time the remainderman

comes into actual possession and enjoyment. This

block is applicable only to estates where the decedent

died prior to December 13, 1982.

Block 4: Limited Estate - check this block to indicate

that the decedent created a limited estate (i.e., one

which does not allow for the disposition of assets out-

right at the time of death but allows for their limited dis-

tribution to a beneficiary for the duration of the benefi-

ciary’s life or a specific term of years). For further infor-

mation please refer to the instructions for Schedules K

and M on pages 16 and 17.

Block 4a: Future Interest Compromise - check this

block to request a compromise if the rate of tax which

will be applicable when a future interest vests cannot be

established with certainty. If this block is checked, you

must complete Schedule M. This block is applicable

only to estates where the decedent died on or after

December 13, 1982.

Block 5: Federal Estate Tax Return Required - check

this block if the total assets reportable to the Internal

Revenue Service require that a Federal Estate Tax

Return be filed. A copy of the federal return, (Form 706),

must be filed with the Department of Revenue through

the Register of Wills office within one (1) month of the fil-

ing of the federal return.

Block 6: Decedent Died Testate - check this block if the

decedent died having a valid will which has been submit-

ted to the Register of Wills for probate. A copy of the will

must be attached to the return when it is filed.

Block 7: Decedent Maintained A Living Trust - check

this block if the decedent, during his lifetime, transferred

property and retained or reserved an interest or a

power of disposition. A copy of the instrument must be

attached to the return when it is filed.

Block 8: Total Number of Safe Deposit Boxes

Inventoried - enter the number of safe deposit boxes held

by a decedent alone or jointly (except with a surviving

spouse) which were required to be inventoried either by

a representative of the Department of Revenue or an offi-

cial of the financial institution in which the safe deposit

box was held.

Block 9: Litigation Proceeds Received - check this block

if the estate received proceeds of litigation after nine (9)

months from the date of death.

Block 10: Spousal Poverty Credit - check this block if the

estate is claiming the spousal poverty credit which is

available for estates of decedents who died after

December 31, 1991 and before January 1, 1995. The

credit is not allowed unless the block is checked and

Schedule N is completed and filed with the return.

Block 11: Election to Tax Under Sec. 9113(A) - check

this block if the decedent created a trust or similar

arrangement which qualifies under Sec. 9113(A), and for

which an election to impose the trust or similar arrange-

ment to tax in this estate has been made. The election

will not be allowed unless the block is checked and

Schedule O is completed and filed with the return.

CORRESPONDENT

This section must include the name of the person

whom the personal representative designates to

receive correspondence. All requests for informa-

tion and documentation from the Department,

including the tax assessment will be forwarded to

this individual. This section should also include the

correspondent’s address and telephone number.

RECAPITULATION

At the bottom of each individual schedule is an area to

list the total of the assets or deductions included on that

schedule and the particular line in the Recapitulation on

which that total must be included. All totals must be car-

ried forward from the individual schedules to the

Recapitulation section on the cover sheet. If there are

no assets or deductions to report on a particlar sched

ule, the schedule should not be submitted and that line

item on the Recapitulation should be identified as

“none”. If assets are reported and are considered not

taxable, the schedule must be submitted and a zero

(-0-) placed on the applicable line of the cover sheet.

Schedule G must be completed and submitted if the

answer to any of the questions one through four on the

reverse side of the REV-1500 cover sheet is “yes”

All assets shown on Line 1 through Line 7 of the

Recapitulation Sheet are added together and the total

value of all assets is entered on Line 8.

All deductions shown on Lines 9 and 10 of the

Recapitulation Sheet are added together and the total is

entered on Line 11. Line 12 is the Net Value of Estate

after the deductions are subtracted (Line 8 minus Line

11).

Line 13 represents any bequests made to institutions

which qualify as tax-exempt charities or tax-exempt

governments, and the value of any trust or similar

arrangement which qualifies under Section 9113 as a

sole use trust for the benefit of the surviving spouse for

which an election to tax in the present decedent’s

estate has not been made. Line 14 represents the value

of the estate subject to tax, including outright distribu-

tions to the surviving spouse and the value of any trust

which qualifies under Section 9113 for which an elec-

tion to tax has been made on Schedule O. (Line 12

minus Line 13).

TAX COMPUTATION

The Inheritance Tax Return Resident Decedent (form

REV-1500) can be used for all filings with the

Department, including those prior to the revision date.

Special care should be taken to insure that transfers to

a surviving spouse are reported on the appropriate line

of the tax computation section. For estates of dece-

dents dying before July 1, 1994, transfers to a surviving

spouse are subject to tax at 6% and should be included

on Line 16 of the return. For estates of decedents dying

on or after July 1, 1994, transfers to a surviving spouse

are subject to tax at the rates determined by the follow-

ing dates of death:

Date of Death Tax Rate

7/1/94 through 12/31/94 3%

1/1/95 and thereafter 0%

The rate of inheritance tax assessed is determined by

the relationship of the beneficiaries or transferees of the

estate to the decedent.

To compute the tax, total all distributions under will or

intestate share, life estate or annuity interests, transfers

passing outright to the surviving spouse, or trust assets

for which an election has been made to tax in the pre-

sent decedent’s estate. Enter this total in the first space

on Line 15. Multiply by the appropriate rate for the sur-

viving spouse as provided in General Information

Section of this booklet and enter the result in the second

space on Line 15.

Total all distributions under will or intestate share, life

estate or annuity interests, joint assets, and transfers

passing to Class A (lineal) beneficiaries or transferees,

including assets in trust for the current decedent which

were not subject to tax at the death of a predeceased

spouse. Enter this total in the first space on Line 16,

multiply by .06 (the 6% tax rate for Class A beneficiaries

or transferees) and enter the result in the second space

on Line 16.

Total all distributions under will or intestate share, life

estate or annuity interests, joint assets, and transfers

passing to Class B (collateral) beneficiaries or transfer-

ees, including assets in trust for the current decedent

which were not subject to tax at the death of a prede-

ceased spouse. Enter this total on the first space on

Line 17, multiply by .15 (the 15% tax rate for Class B

beneficiaries or transferees) and enter the result in the

second space on Line 17. If the estate includes a life

estate, annuity, or a compromise of a contingent future

interest, the values from Schedule K or Schedule M

must be included on Line(s) 14 through 16, as appropri-

ate.

Add Lines 15, 16 and 17 and enter the total on Line 18.

This is the principal tax due.

Check the block on Line 19 to request a refund of an

overpayment.

REV-1500 - REVERSE SIDE

Enter the decedent’s complete address in the first sec-

tion on the back of the REV-1500.

TAX PAYMENTS and CREDITS

Carry the tax due amount from Line 18 on the front of

the tax return to Line 1 on the reverse side of REV-1500.

Line 2 should include any credits, including: (a) spousal

poverty credit which the estate has claimed; (b) the

actual amount of tax paid, as well as (c) discount

allowed on payments made within three (3) months of

the date of death. Compute the interest and penalty

due, if applicable, and enter on Line 3. Refer to Section

INTEREST and PENALTY in the first part of this book-

let for assistance in the computation of interest and

penalty.

If Line 2 is greater than Line 1 plus Line 3, enter the dif-

ference on Line 4. This is the overpayment. Check the

block on the front of the REV-1500 at Line 19 to

request a refund of the overpayment. If Line 1 plus Line

3 is greater than Line 2, enter the difference on Line 5.

This is the balance due. Compute any interest which

has accrued on this balance and enter on Line 5A.

Total Lines 5 and 5A and enter on 5B. Make the check

payable to the “Register of Wills, Agent”.

QUESTIONS ON REVERSE

Answer questions 1 through 4 listed on the reverse

side of the cover sheet pertaining to lifetime transfers

made by the decedent. Schedule G must be complet-

ed and filed with the return if “yes” is the answer to any

question.

The last section on the reverse side of REV-1500 con-

cerns estates of decedents who died on or after

January 1, 1995, and were survived by a spouse.

Answer the question if it is applicable.

After making sure the return is complete and contains

all the necessary schedules, the person(s) responsible

for filing must sign and date the return. The

address(es) of the signer(s) must also be included.

Those signing the return are legally responsible and

may incur liability for erroneous, false or fraudulent

returns.

If there is no personal representative, every person in

actual or constructive possession of any property of

the decedent is considered, by law, a fiduciary for the

purposes of the tax and must file a return. If the

estate representative(s) secured help in preparing the

return, the preparer’s signature, address and date

prepared must be shown on the last line.

INSTRUCTIONS FOR SCHEDULES

SCHEDULE A

REAL ESTATE

This schedule must list and describe all real property

located in Pennsylvania owned by the decedent at the

time of death, other than real property owned with right

of survivorship (see Schedule F instructions). The real

estate description must be sufficiently detailed as to

enable the Department of Revenue to readily locate it

for inspection and valuation, if necessary. The real

property should be described by size, lot and block

number, street and street number, together with a gen-

eral description of the property and the conveyance by

which the decedent took title.

If the decedent owned a fractional interest in a parcel of

real property as a tenant in common, state the dece-

dent’s fractional interest, include the full value of the

property with the description, and enter only the value of

the decedent’s interest in the column marked, “Value at

Date of Death”.

If any item of real estate is subject to a mortgage for

which the decedent’s estate is liable, the full value of such

realty must be shown on Schedule A. However, any

mortgage deduction may be claimed on Schedule I. Any

real estate located in Pennsylvania which the decedent

had contracted to purchase should also be listed on

Schedule A. List the full value of the property on

Schedule A and claim the unpaid portion of the pur-

chase price as a deduction on Schedule I.

Although the use of the county assessment figure and

the “common level ratio” as determined by the State Tax

Equalization Board is required in certain situations for

valuation purposes when calculating state realty trans-

fer tax, there is no statutory requirement that the

Department also accept this method for the valuation of

real estate for inheritance tax purposes. Estates are

required to report all real estate at the fair market value

as of the date of death.

Fair market value is defined as the price at which the

property would be sold by a willing seller, not compelled

to sell, to a willing buyer, not compelled to buy, both of

whom have reasonable knowledge of the relevant facts.

Examples of factors to be considered include the state

of repair of all structures, locality, trend of real estate

values in the neighborhood, estimated sale price and/or

recent comparable sales of similar properties.

Submit copies of any appraisals, sale settlement sheets

or agreements of sale with the return to explain how the

reported value was determined.

Rents due, but not collected, or rents accrued, but not

due as of the date of death, are taxable property and

must be reported on Schedule E.

Under Section 9122 of the Inheritance and Estate Tax

Act of 1991, land devoted to agricultural use, agriculture

reserve or forest reserve may be eligible for preferential

assessment measured by particular use, rather than by

fair market value. This preferential valuation may be

used to determine county property tax assessments. If

you elect to use this method of valuation, the special

use valuation under the Pennsylvania Farmland and

Forest Land Assessment Act of 1974, 72 P.S. §5490.1,

et. seq. must be reported. You will also be required to

submit fair market value appraisals of the residential

property, farm outbuildings and agricultural property so

that a proper valuation may be made if the special use

is discontinued or if the property does not meet all

requirements.

Do not report a retained life estate on this schedule.

See Schedule G.

SCHEDULE B

STOCKS AND BONDS

On this schedule list all stocks and bonds owned by the

decedent solely or as a tenant in common on the date

of the decedent’s death. The stock description must

include the number of shares, whether common or

preferred, par and market values, the exact name of the

corporation and CUSIP number, if available. The

description of the bonds must include the type of bond,

quantity, denomination, obligor, date of maturity, inter-

est rate, and interest due dates.

Determine the market value by taking the mean of the

highest and lowest quoted selling prices on the date of

death. Where death occurs on a weekend the valuation

of any stock listed on the New York or American Stock

Exchange is the average of the mean between the high

and low for Friday and the mean between the high and

low on the Monday after death. Where death occurs on

a holiday the valuation of such stock is the average of

the mean of the high and the low on the day preceding

the holiday and the mean between the high and low of

the succeeding market day. If there were no sales on

the valuation date, but there were sales on dates with-

in a reasonable period both before and after the valua-

tion date, the fair market value is determined by taking

a weighted average of the means between the highest

and lowest sales on the nearest date before and the

nearest after the valuation date. The average is to be

weighted inversely by the respective numbers of trad-

ing days between the selling dates and the valuation

date. In cases of stock quotations listed as “Over the

Counter”, use the mean between the bid and asked.

Mutual funds are to be reported at the net asset value

(NAV). Include as a separate item dividends not col-

lected at death but payable to the decedent or estate

because decedent was a stockholder of record on or

before the date of decedent’s death. When stock is

being traded on an exchange and is selling ex-dividend

on the date of the decedent’s death, add the amount of

the dividend to the ex-dividend quotation to determine

the fair market value of the stock as of the date of the

decedent’s death.

Interest due, but not collected, and interest accrued, but

not due as of the date of death of decedent, is taxable

and must be reported on Schedule B.

SCHEDULE C

CLOSELY HELD CORPORATION, PARTNERSHIP

OR SOLE-PROPRIETORSHIP

All business interests, including proprietorships held by

the decedent, must be included on Schedule C. In addi-

tion to a general description and date of death value,

you must submit the appropriate supplemental sched-

ule (C-1 or C-2) and all information relative to estab-

lishing the true value of the decedent’s interest. All joint-

ly owned business interests must be reported on

Schedule F, and the appropriate supplemental sched-

ule(s) and verification data must be prepared and

attached.

The verification data which must be submitted for

closely held corporate stock interests include:

1. Detailed calculations used in the valuation of the

decedent’s stock.

2. Complete copies of financial statements or

Federal Corporate Income Tax returns (Form

1120) for the year of death and 4 preceding

years.

3. If the corporation owned real estate, submit a list

showing the complete address/es and estimated

fair market value/s. If real estate appraisals have

been secured, attach copies.

4. List of principal stockholders at the date of death,

number of shares held and their relationship to the

decedent.

5. List of officers, their salaries, bonuses and any

other benefits received from the corporation.

6. Statement of dividends paid each year. List those

declared and unpaid.

7. Any other information relating to the valuation of

the decedent’s stock.

The verification data which must be submitted for

partnership interests includes:

1. Detailed calculations used in the valuation of the

decedent’s partnership interest.

2. Complete copies of financial statements or

Federal Partnership Income Tax returns (Form

1065) for the year of death and 4 preceding years.

3. If the partnership owned real estate, submit a list

showing the complete address/es and estimated

fair market value/s. If real estate appraisals have

been secured, attach copies.

4. Any other information relating to the valuation of the

decedent’s partnership interest.

Complete a separate report for each interest in a

closely held corporation and/or partnership held by a

decedent.

For sole-proprietorships, a supplemental schedule is not

necessary. However, the estate must submit the follow-

ing information with the return:

1. Detailed calculations used in the valuation of the

decedent’s proprietorship interest.

2. Complete copies of financial statements or copies

of the decedent’s Federal Income Tax returns,

including Schedule C and supporting schedules,

or the year of death and four preceding years. If

financial statements are unavailable, include a

balance sheet as of the date of death.

3. A breakdown of liquidation distributions, if the

proprietorship was dissolved or liquidated after the

decedent’s death.

4. Real property owned by the decedent and used by

the proprietorship must be reported on Schedule

A. Identify such real property as used in the

proprietorship.

SCHEDULE D

MORTGAGES AND NOTES RECEIVABLE

The following types of assets must be included on

Schedule D:

1. Mortgages - Include the face value and unpaid

balance, date of mortgage, date of maturity,

nameof maker, property mortgaged, mortgage

book reference, schedule of payments, interest

dates and rate of interest. This category refers to

an asset of the decedent, i.e., the decedent was

the person receiving the mortgage payments.

2. Promissory Notes - Include data similar to that

required in mortgages in the preceding para-

graph.

SCHEDULE E

CASH, BANK DEPOSITS AND MISCELLANEOUS

PERSONAL PROPERTY

List on Schedule E all items of the gross estate not

reportable under any other schedule, such as: jewelry,

wearing apparel, household goods and furnishings,

books, paintings, automobiles, boats, farm products,

livestock, farm machinery, cash on hand and in financial

institutions, money market funds, salaries or wages,

debts due the decedent, rents, rents due but not

collected or rent accrued but not due on the date of

death, leaseholds, royalties, patents, judgments, rever-

sionary or remainder interests.

IRA’s, annuities and pension plans payable to the estate

are reported on this schedule. All other IRA’s, annuities

and pension plans are reported on Schedule G. A

detailed discussion of the taxability of these items can

be found in the instructions for Schedule G.

For estates of decedents dying after December 12,

1982, all payments received from life insurance con-

tracts on the life of the decedent, whether paid to the

estate or to another beneficiary, are exempt from inheri-

tance tax. For estates of decedents dying before

December 13, 1982, life insurance payable to the estate

or to an executor or administrator for the use of the

estate is taxable and should be reported on Schedule E.

Schedule E must include a list of all real property situat-

ed outside the Commonwealth which the decedent had

contracted to sell and for which settlement had not

occurred prior to death, provided that the property is not

subject to death tax in the state, country or territory

wherein the property is located. Tangible personal

property located outside Pennsylvania is not subject to

inheritance tax.

If any article (e.g., jewelry, furs, silverware or paintings,

etc.) is worth more than $3,000 or if any collection of arti-

cles in one category is valued at more than $10,000,

include an appraisal by an expert and that appraiser’s

statement concerning his qualifications.

For cash in banks and other financial institutions, report

the name and address of the financial institution, the

account number, nature of the account (i.e., checking,

savings) and the date of death balance. Retain any

statements obtained from the financial organizations for

inspection by the Department of Revenue. It will be help-

ful to attach copies of such statements to the return.

This schedule should also be used to report the pro-

ceeds received by the estate as the result of litigation ini-

tiated by the decedent prior to his death, or by the per-

sonal representative of the estate on behalf of the

decedent. Sufficient documentation should be submitted

to allow the Department of Revenue to determine if the

recovery is subject to inheritance tax and, if so, from

which date interest will be imposed. In all cases, a copy

of the settlement agreement and/or court approved

schedule of distribution should be supplied. If the

Department of Revenue has previously reviewed and

accepted thesettlement please attach verification. In

cases where structured settlements have been accepted

or there is an agreement to provide payments for a num-

ber of years, it will be necessary for the estate to submit

information sufficient for the Department to calculate the

present value of such distributions.

Any supplemental information which the estate

representative considers confidential may be submitted

directly to the PA Department of Revenue, Bureau of

Individual Taxes, Dept. 280601, Harrisburg, PA 17128-

0601 with a statement that the documents are not part of

the public record. Confidential documents need not be

attached to the return filed with the Register of Wills.

SCHEDULE F

JOINTLY-OWNED PROPERTY

Include on Schedule F all property of whatever kind or

character, whether real estate situated in the

Commonwealth of Pennsylvania or personal property,

(except tangible personal property with a foreign situs) in

which at the time of death the decedent held an interest

as a joint tenant with right of survivorship with someone

other than the decedent’s surviving spouse. (Do not list

property which the decedent held as a tenant in common

or nominee, or in a partnership, but the value of the

decedent’s interest, if any, should be reported on the

appropriate asset schedule. When in doubt, disclose and

explain by short notation or otherwise any asset held

wholly or partly in the name of the decedent.) Disclose

the full value of all assets on this schedule and show the

decedent’s taxable interest at death. Determine the

decedent’s taxable interest by dividing the full value of

the property by the number of joint tenants. Only the

fractional ownership interest of the decedent at the date

of death is subject to tax, unless the joint ownership was

created within one year of the decedent’s death (within

two years of the decedent’s death if death occurred on

or before December 12, 1982). Joint tenancies, includ-

ing those between husband and wife, created within

one year of the decedent’s death (or two years for

estates of decedents dying on or before December

12, 1982), must be reported on Schedule G.

List on Schedule F a complete description of the assets

indicating the date the asset was placed into joint

ownership, the exact balance or market value at date of

death, and the value of the taxable interest. Each

description must show the exact registration of the

asset and the appropriate letter, A. B. C. etc., to indicate

the name, address, and relationship of each of the sur-

viving joint tenants.

If the surviving joint owner of any asset has received a

separate assessment notice from the Department and

paid the tax due on a specific joint asset, the value of

that asset should not be included in the total for this

schedule.

Do not report a retained life estate on this schedule.

See instructions for Schedule G.

SCHEDULE G

INTER VIVOS TRANSFERS & MISCELLANEOUS

NON-PROBATE PROPERTY

Include on Schedule G the transfer of assets defined by

Section 9107(c) which were made by the decedent dur-

ing life, by trust or otherwise, to the extent that they

were made without valuable and adequate considera-

tion in money or money’s worth at the time of the trans-

fer, and also assets held in a trust as defined in Section

9113(A) for the benefit of the current decedent which

was not subject to tax in the donor’s estate. Transfers

which are subject to tax should be valued as of the date

of the transferor's death, and not the date of the trans-

fer. You must include all such transfers including the

name and relationship of the transferee (see items 1

through 6 following) in the gross estate on this sched-

ule.

1. IRA’S, ANNUITIES AND PENSION PLANS -

Where a decedent, during his lifetime, possessed rights

in an employment benefit plan beyond those described

below, the payments received from the plan will be sub-

ject to tax. Rights under a plan which would subject the

plan’s payment to inheritance tax would include, but are

not imited to, the right to withdraw benefits, including

the right to withdraw only upon payment of a penalty

(providing the penalty is smaller than 10% of the with-

drawal), the right to borrow monies from the retirement

plan, the right to assign the benefits of the plan to

another, the right to pledge the plan and/or its benefits,

the right to anticipate the benefits of the retirement plan

(other than in regular monthly in-stallments), or the

right, by contract or otherwise, to materially alter the

provisions of the plan.

Payments received from Employment Benefit Plans

such as pension plans, stock bonus plans, profit

sharing plans and all other retirement plans, including

but not limited to, H.R. 10 (Keogh) plans, individual

retirement accounts (IRAs), individual retirement annu-

ities, and individual retirement bonds will be exempt

from tax if any of these conditions exist:

a. The payments are exempt from the federal estate tax

under the provisions of the Internal Revenue Code of

1986, as amended, any supplement to the code, or any

other similar provision in effect for federal estate tax

purposes; or

b. The payment would be exempt for federal estate tax

purposes if it had not been made in a lump sum or other

nonexempt form of payment, and the payment is made

in a lump sum or other nonexempt form of payment; or

c. The decedent, during his lifetime, did not have the

right to possess (including proprietary rights at termina-

tion of employment), enjoy, assign or anticipate the

payments made.

A decedent whose only rights under the plan were to

designate a beneficiary and to receive a regular month-

ly payment under the plan, is not considered as having

the right to possess, enjoy, assign, or anticipate.

Therefore, the possession of either the right to desig-

nate a beneficiary or the right to receive regular month-

ly payment under the plan, either alone or together, will

not subject the plan to inheritance tax, as long as no

other rights exist.

In general IRAs are taxable if the decedent was age 59

or older, or considered disabled at any age.

2. TRANSFERS MADE WITHIN ONE (1) YEAR OF

DECEDENT’S DEATH - Such transfers by a decedent

are subject to tax to the extent that they exceed $3,000

at the time of the transfer or a combined total of all

transfers per transferee during any calendar year

exceeds $3,000. For example, if the decedent trans-

ferred $10,000 within one year of his death, $7,000

would be subject to Inheritance Tax. For estates of

decedents dying on or before December 12, 1982,

there is a presumption that transfers of a material part

of an estate made by a decedent within two (2) years of

death were made “in contemplation of death”, where

the dominant or impelling motive, but not necessarily

the sole motive, of the transferor was prompted by the

thought of death, without which motive the

transfer would not have been made. In such instances,

the entire value of the transfer is subject to tax, unless

the presumption is rebutted by the submission of rele-

vant evidence.

3. RETAINED REVERSIONARY INTEREST - Such

transfers are those in which the transferor (decedent)

reserved the right to regain or reassert control over the

corpus of the transferred property, provided that the

value of the reversionary interest in the property imme-

diately before the decedent’s death was in excess of

5% of the value of the transferred property.

4. TRANSFERS IN WHICH THE DECEDENT

RETAINED A LIFE INTEREST - Include transfers

under which the decedent expressly or impliedly

reserved for life or any period which does not, in fact,

end before death the income or the enjoyment of the

property. For example, a life interest in real estate

includes the right to use or occupy the real estate or

receive rents. Continued occupancy without the actual

payment of fair market value rent is one example of evi-

dence of a retained life estate. Rental income from such

property must be verified by the landlord.

5. PROMISES BY TRANSFEREE - Such transfers are

those under which the transferee promises to make

payments to or care for the transferor during the

remainder of the transferor's life.

6. REVOCABLE AND TENTATIVE TRUSTS - Include

transfers under which the decedent had, either alone or

in conjunction with another person, a power to alter,

amend or revoke the interest of the beneficiary, for

example, an account registered in the name of the

decedent in trust for another person. The relinquish-

ment of such a power within one year of the death of

the transferor is a transfer subject to tax.

Note: The $3,000 exclusion is not applicable to the

transfers described in paragraphs 3 through 6 above.

However, the $3,000 exclusion would apply under para-

graph 6, if the decedent relinquished the right to revoke

within one (1) year of the date of the decedent’s death.

Schedule G also must be used to report assets that

were created or transferred into joint tenancy in the

name of the decedent and another or others, including

the decedent’s surviving spouse, within one year of the

decedent’s death. Any joint tenancy so created will

cause the entire interest to be taxed in the estate of the

person creating the joint tenancy to the extent that the

total value of the assets placed in joint ownership with

any one person exceeds $3,000. For estates of dece-

dents dying on or before December 12, 1982, joint ten-

ancies created within two (2) years of a decedent’s

death are presumed to have been created “in contem-

plation of death” and are fully taxable unless the pre-

sumption is rebutted. (See item 2 above.)

If you answer “yes” to any of the questions on the

reverse side of the REV-1500 cover sheet, you must

complete Schedule G and file it as part of the tax return.

Fully describe the transferred property and show the

total value and the value of the decedent’s interest in

the asset. You may submit copies of documentation

supporting a position of nontaxability or which explains

how the reported values were determined.

When a trust as defined by Section 9113(a) is reported

on this schedule as a transfer by this decedent, it will be

necessary to submit documentation relative to the valu-

ation of the assets and a copy of the instrument creat-

ing the trust.

SCHEDULE H

FUNERAL EXPENSES & ADMINISTRATIVE

COSTS

List on Schedule H all funeral and burial expenses, all

administrative costs, any claim made for the family

exemption, and all miscellaneous expenses. Except as

noted below, these items are deductible regardless of

whether or not assets comprising the decedent’s tax-

able estate are employed in the payment or discharge

of the deductible items. When a tax is imposed upon a

transfer of jointly owned property by right of survivorship

(see Schedule F) or upon a taxable inter vivos transfer

(see Schedule G), the deductions shall be allowed to

the transferee only to the extent that the transferee has

actually paid the deductible items and either the trans-

feree was legally obligated to pay the deductible items

or the estate subject to administration by a personal

representative is insufficient to pay the deductible items.

The transferee must show that the same debts are not

claimed by an executor, administrator or other personal

representative handling the administration of the dece-

dent’s estate.

Part A. FUNERAL AND BURIAL EXPENSES -

Itemize, giving names of persons to whom payable and

the exact nature of the expense. Such expenses

include, but are not limited to: opening of graves, ser-

vices of mortician, embalming and transportation, cas-

ket, clothes, flowers, travel expenses and fee of clergy-

man, rental of church or house for burial ceremonies,

food and refreshments during the funeral period, the

cost of a family burial lot or other resting place, and pur-

chase and erection of a marker, gravestone or monu-

ment on decedent’s burial lot or final resting place,

bequests or devises in trust or funds placed in trust after

decedent’s death, or funds paid under a contract after

decedent’s death to the extent that such funds or the

income therefrom are applied to the care and preserva-

tion of the family burial lot or other final resting place in

which the decedent is buried, bequests for the

celebration of religious rites, rituals, services or cere-

monies in consequence of the death of the decedent.

All deductions for funeral and burial expenses must be

reasonable and customary based upon the decedent’s

station in life and the size of the estate. You need not

reduce the amount of allowable deductions by any

amount received as government burial benefits, such as

the social security death benefit.

Funeral expenses paid by a prepaid funeral account are

deductible. The prepaid account must be reported as an

asset of the decedent on Schedule E.

Part B. ADMINISTRATIVE COSTS - Itemize, giving

the names of the persons to whom payable and the

exact nature of the expense.

You may deduct, in reasonable amounts, fees for ser-

vices rendered to the estate, fiduciary commissions and

professional fees which will be paid, but commissions or

fees which will not be paid may not be deducted.

Personal Representative’s Commissions

Personal representative or fiduciary commissions con-

stitute taxable income. When claiming the commission,

include the individual personal representative’s or

fiduciary’s social security number. Commissions

received by residents of Pennsylvania must be reported

as compensation for Personal Income Tax purposes in

the year in which they are received. Corporate fiducia-

ries must include a federal identification number.

Attorney Fees

Attorney fees incidental to litigation instituted by the

beneficiaries for their benefit do not constitute a proper

deduction. Other administration expenses include, but

are not limited to: costs of letters testamentary or of

administration, accounting fees, tax return preparation

fees, estate notices, inventory, fees of appraisers, wit-

nesses, short certificates, affidavits, fees for account

and adjudication, public liability insurance premiums,

stock transfers, stamps, registered mail charges, certi-

fied copies of will, fees for recording instruments, bank

charges for supervision of entry into safe deposit boxes,

broker’s commissions, state and local realty transfer

taxes, cost of maintaining property administered, and

other services.

Family Exemption

The family exemption is a right given to specific individ-

uals to retain or claim certain items or amounts of the

decedent’s property in accordance with Section 3121 of

the Probate, Estates and Fiduciaries Code. For dates of

death from June 27, 1974 through January 29, 1995,

the family exemption is $2,000; after January 29, 1995,

the amount is increased to $3,500. The spouse of any

decedent, or if there is no spouse, then such children

who are members of the same household as the

decedent at the decedent’s death, or if there are no

children, then the parent or parents of the decedent who

are members of the same household as the decedent at

the decedent’s death, may retain or claim property to

the value permitted by law as the “family exemption”

under the Probate, Estates and Fiduciaries Code. This

exemption, if properly claimed, is a recognized deduc-

tion and should be listed in Part B, giving the name of

the claimant, his or her relationship to the decedent and

the claimant’s address at the time of the decedent’s

death. If the claimant’s address is not the same as the

decedent’s address shown on the reverse side of the

REV-1500 cover sheet, provide a written explanation

stating why the exemption is being claimed. The fami-

ly exemption is legally payable only from the pro-

bate estate of the decedent. Accordingly, it may not

be claimed as a deduction except to the extent that

there are sufficient probate assets to satisfy the exemp-

tion from this property. A family exemption cannot be

claimed against assets listed on Schedules F and G

of the return.

SCHEDULE I

DEBTS OF DECEDENT, MORTGAGE LIABILITIES

& LIENS

List on Schedule I all valid debts of the decedent owed

at the time of death, including all mortgages and liens

on real estate (including interest due to the date of

death). Except as otherwise noted, these items are

deductible regardless of whether or not assets compris-

taxable estate are employed in the payment or dis-

charge of the deductible items. However, uncollectible

liens are not allowable as a debt of the decedent. These

would include invalid liens such as those filed while the

decedent is under bankruptcy. When a tax is imposed

upon a transfer of jointly owned property by right of sur-

vivorship (see Schedule F) or a taxable inter vivos

transfer (see Schedule G), the deductions will be

allowed to the transferee only to the extent that the

transferee has actually paid the deductible items and

either the transferee was obligated to pay the

deductible items or the estate subject to administration

by a personal representative is insufficient to pay the

deductible items. The transferee must show that the

same debts are not also claimed by an executor, admin-

istrator, or other personal representative handling the

administration of the decedent’s estate.

Examples of obligations which should be itemized on

Schedule I include property taxes which are owing prior

to decedent’s death, secured loans, liabilities, and

claims based on a promise or agreement, provided that

the liability was contracted bona fide and for an ade-

quate and full consideration. The deduction on a joint

obligation is limited to the decedent’s proportionate

share of liability and may be deducted whether or not

payment is secured by entireties’ property or property

which passes to another under the right of survivorship.

Expenses incurred in treating the decedent’s last illness

which are unpaid at the time of death are not deductible

if they will be paid, or the estate will be reimbursed for

their payment, from other sources such as medical

insurance. Include only expenses which will not be paid

or reimbursed by medical insurance on this schedule.

For estates of decedents dying on or before December

12, 1982, medical expenses which are unpaid at the

time of the decedent’s death are deductible whether or

not the debts will be paid by a third party insurer. Note,

however, that in cases where the medical insurance

proceeds are paid or payable to the decedent’s person-

al representative (rather than directly to the providers of

the medical services), the proceeds also must be

included as taxable transfers in the decedent’s estate.

SCHEDULE J

BENEFICIARIES

Schedule J must include the names and addresses of

all beneficiaries, including charitable organizations, as

well as the amount of the distribution by will or intestate

share.

Part I must include the names and addresses of the

non-charitable beneficiaries of the estate, the relation-

ship to the decedent, and the value of the interest to

which each is entitled, other than the value of a trust

which qualifies under Section 9113(a), unless an elec-

tion to subject the value of the trust to tax in this estate

will be made. If the estate is paid to an inter vivos trust,

or if assets pass under the terms of an inter vivos trust

which is taxable (see Schedule G instructions), the

names, addresses and relationship of each potential

trust beneficiary must be listed. The value of these

bequests are subject to tax. Do not list the trustees as

beneficiaries of the estate.

If assets pass under the terms of a trust as defined by

Section 9113(a), the name, address, and relationship of

each potential remainder trust beneficiary must be

listed.

In Part II, Section A., list any trust or similar arrange-

ment, or portion thereof, which benefits only the surviv-

ing spouse for his or her entire lifetime for which a

Schedule O election to tax as a transfer in the first

decedent spouse’s estate is not being made.

In Part II, Section B, list all bequests made to institutions

qualifying for the charitable exemption under Section

9111(c) of the Inheritance and Estate Tax Act, and all

governments qualifying for the exemption under Section

9111(b). If the institution is not listed in the Cumulative

List of Organizations, Publication 78, Internal Revenue

Service, submit a copy of the federal exemption, if

available, or a copy of the bylaws of the organization.

Bequests must be specifically contained in the will or

trust instrument in order to qualify as a charitable

bequest. Approved charitable be quests are not subject

to tax.

When there are no qualified beneficiaries to receive the

net proceeds of the estate by will or by intestate share,

the Commonwealth of Pennsylvania is the statutory heir

under Section 2106 of the Probate, Estates &

Fiduciaries Code. In such cases, indicate

“Commonwealth of PA, Statutory Heir” in Section II, Part

B., Charitable and Governmental Distributions, along

with the amount which will bedistributed.

Total Sections A and B of Part II and enter the amount

on Line 13 of the REV-1500 cover sheet. The amount

on Line 13 should represent the value of all charitable

bequests, governmental distributions, and the value of

Section 9113(a) trust(s), of fractions thereof, for which

an election to tax in the subject estate has not been

made.

SCHEDULE K

LIFE ESTATE, ANNUITY & TERM CERTAIN

This schedule must list and describe all presently vest-

ed life estates, annuities and terms certain created by

the decedent for which valuations must be actuarially

determined. The asset(s) subject to the annuity or

life estate calculation must be included in the asset

schedules (A through G).The description of the trust,

property interest or other arrangement to be valued

must include the name, date of birth, and age of each

beneficiary to enable the Department of Revenue to

readily identify the property interest to be valued with

reference to the governing instrument. If the interest to

be valued is the right to receive the income or annuity

for a term certain rather than the life of a person, include

the number of years.

If the decedent, by testamentary disposition or inter

vivos transfer, did not allow for the disposition of assets

outright at the time of death but allowed for their limited

distribution to a beneficiary for the duration of the bene-

ficiary’s life or allowed for disposition over a specific

term of years, it is a taxable transfer.

For decedents dying on or after December 12, 1982,

the valuation methods are the same as described in US

Treasury Department regulations. The actuarial tables

used for dates of death on or after May 1, 1989 can be

found in IRS Publication 1457, Actuarial Tables, Alpha

and Beta Volumes.

Questions concerning the valuation of remainder inter-

ests, annuities, unitrusts and pooled income funds for

estates of decedents dying prior to May 1, 1989 should

be directed to the Chief, Inheritance Tax Division,

Bureau of Individual Taxes.

For estates of decedents dying on or after May 1, 1989,

the present value of an annuity or life estate which is

dependent on the continuation or termination of the life

of only one person or the present value of an annuity or

income interest which is payable for a term certain will

be determined using tables which incorporate an interest

rate equal to 120 percent of the federal mid-term annual

rate in effect for the month in which the date of death

occurred. For purposes of the computation, the age of

the life tenant used is his or her age on the birthday near-

est to the date of death.

Effective January 1, 1997, the PA Department of

Revenue will begin charging a fee for private letter valu-

ations which involve an actuarial calculation. This fee is

similar to that charged by the Internal Revenue Service

for private letter rulings which involve an actuarial calcu-

lation, and is a result of the increase in requests due to

rate changes in the 1995 amendments to the PA

Inheritance and Estate Tax Act.

The fee must be paid by a certified form of payment prior

to the issuance of the valuation. Acceptable forms of

payment are a money order, bank draft, or certified

check made payable to the PA Department of Revenue.

Personal or business account checks will not be accept-

ed. The fee schedule is as follows:

$250 A single life estate or term certain with no

potential for invasion of the trust principal, or

the need for a probability of survival computa

ion for the remaindermen.

$450 A single life estate or term certain with poten-

tial for trust invasion and/or the need for a

survival probability calculation, a double life

estate, or fixed annual right of invasion, such

as the standard 5% or $5000.

$650 A life estate calculation involving three or more

ages and no right to invade the trust principal, a

one or two life unitrust calculation, a one or two

life pooled income fund calculation, or a term

certain with various distribution amounts during

the term.

$850 Any complex actuarial calculation involving

more than three ages, a trust involving more

than a fixed 5% or $5000 annual right of inva-

sion, a probability of at least one of three or

more people surviving a life tenant for distribu

tion to occur at a specific tax rate; or any cal

culation which requires the development of a

specialized computer program(s).

$200 Revision of the computation due to a change

in the information originally provided by the

estate representative.

Each request for a private letter valuation must include

the name of the decedent, the date of death, and the

estate file number. Private letter valuations will not be

issued for estate planning purposes. The Department of

Revenue will continue to provide single life estate fac-

tors by telephone free of charge.

The Department should be contacted at least three

weeks in advance of the date needed to request a

written valuation. The calculation and written valuation

will be mailed to the estate representative. You may

contact the Trust Valuation Specialists at

(717) 787-8327 if you have any questions. Requests

should be mailed to:

Pa Department of Revenue

Inheritance Tax Division,

Specialty Tax Unit

Dept. 280601

Harrisburg, PA 17128-0601

The request must be accompanied by a statement of

the dates of birth of each person, the duration of whose

life may affect the value of the interest, and copies of

the relevant instruments.

For Charitable Remainder Unitrusts and Pooled Income

Funds, the factor to compute the interest of a beneficia-

ry is calculated in accordance with the methods

described in US Treasury Department regulations.

SCHEDULES L, L-1, L-2

REMAINDER RETURNS

These schedules are appropriate only for estates of

decedents dying on or before December 12, 1982.

Schedule L along with Schedule L-1 and L-2 are used

to report invasions of principal and elections to prepay

tax on the remainder interest.

Additional information is available from the Chief,

Inheritance Tax Division, Bureau of Individual Taxes,

Dept. 280601, Harrisburg, PA 17128-0601.

SCHEDULE M

FUTURE INTEREST COMPROMISE

This schedule is appropriate only for estates of

decedents dying on or after December 13, 1982.

Section 9116(e) of the Inheritance and Estate Tax Act

of 1991 [72 P.S. § 9116(e)] effective October 3, 1991

authorizes the Department of Revenue to compromise

the amount of tax payable on a future interest when

the rate of tax cannot be established with certainty.

This section is applicable only if a contingency makes

it impossible on the date of death of a decedent to

determine the rate of tax which will apply when a

future interest vests in possession and enjoyment. A

compromise request is not necessary if all potential

beneficiaries are taxable at the same rate, and the

only uncertainty is the identity of the ultimate benefi-

ciary of a future interest, if all potential beneficiaries

are taxable at the same rate.

The following examples illustrate situations in which

compromise determinations apply:

Example 1 - (a) Date of death after December 2, 1982

and before January 1, 1995 - Decedent bequeathed the

residue of his estate to his trustee, in trust, and direct-

ed payment of income to his wife, age 65, for life. Upon

her death, the remainder will be distributed to dece-

dent’s son, age 38 at decedent’s death, provided he

survives the decedent’s wife. If the son does not survive

the wife, the remainder is distributable to charity. This

estate qualifies for a compromise determination since it

is uncertain at the time of the decedent’s death whether

the remainder ultimately will pass to a 6 % beneficiary

or to a tax-exempt charity. (b) Date of death after

January 1, 1995 - Since the trust qualifies as a Section

9113 trust, the estate qualifies for a compromise deter-

mination 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 sub-

ject to tax at the 0% rate and the future interest uncer-

tainty would be the amounts available to pass at either

the 6% rate for the son or exempt to the charity.

If a Schedule O election is not made, then the entire

value of the trust would not be subject to tax in the

decedent’s estate but rather would be valued at the

death of the surviving spouse and be subject to tax as

though the transfer were made by the surviving spouse.

Example 2 - Decedent bequeathed the residue of her

estate to her trustee, in trust, and directed payment of

income to her sister, age 87 at decedent’s death, for

life. Trustee is authorized to invade principal for sister’s

health, maintenance and support. Upon her death, the

remainder, if any, will be distributed to charity. This

estate qualifies for a compromise determination

because the trustees may invade principal for the ben-

efit of the life tenant, thereby affecting the value of the

remainder interest which may ultimately pass to charity.

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 educa-

tion 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 inter-

est compromise tax since the value of the spouse’s

interest can be determined by the use of an actuarial

calculation and would be taxable at the rate determined

by the decedent’s date of death. (For dates of death

after December 31, 1994, TRUST A would be includ-

able only if it were subject to an election made by the

decedent’s estate under Section 9113(a).)

Since TRUST B is not for the sole use of the surviving

spouse, it cannot be considered a Section 9113

arrangement and, therefore, qualifies for a future inter-

est compromise tax determination. The uncertainty to

be resolved is whether trust principal will be consumed

for the benefit of the surviving spouse and issue, there-

by affecting the amount available for distribution to the

decedent’s issue at the death of the spouse. (For dates

of death before July 1, 1994, TRUST B is not subject to

a future interest compromise tax determination since all

potential beneficiaries are of the same class and tax

rate). For dates of death between July 1, 1994 and

December 31, 1994, future interest compromise tax

would apply because the spousal tax rate was 3% and

the other potential beneficiaries would be subject to tax

at 6%

To request a compromise determination, the person

responsible for filing the return must check block 4

“Limited Estate” and check block 4a “Future Interest

Compromise” of the REV-1500 cover sheet.

If a contingency makes it impossible on the date of

death to determine the rate of tax which will apply when

a future interest vests in possession and enjoyment and

a compromise determination is not requested by the

taxpayer, the Department will assess tax at the highest

rates which would apply at all points of uncertainty in

the chain of distribution.

Schedule “M”, “Future Interest Compromise,” must

accompany the return if a compromise determination is

requested. All information having a direct or indirect

effect on the compromise portion of the estate should

be presented with the return. Required data would

include the name, relationship, date of birth, age and

sex of each beneficiary involved in the future interest

compromise. The estate is encouraged to provide any

information that is deemed to have an impact on the

possible future benefit to the respective beneficiaries so

that the Department may make informed judgments.

This may include, but would not be limited to: the health

and lifestyle of the respective beneficiaries, individual

wealth of the beneficiary, average expenses, expected

income, etc. The estate’s compromise offer should be

supported by as much factual data and explanatory

information as possible.

The Department of Revenue will review the information

presented to determine if a compromise determination

is appropriate and to evaluate the suggested compro-

mise tax amount submitted by the taxpayer. The

Department’s review may be conducted on actuarial

computation, subjective analysis, or a combination of

both.. If the facts presented on Schedule M do not

reveal any extraordinary circumstances, the determina-

tion of the Department will be made by an actuarial for-

mula without any subjective review. For instance, if, in

Example 1 no exceptional circumstances are identified,

the Department’s analysis and compromise offer would

be based strictly on an actuarial formula. The formula

developed for use in compromise situations involves an

actuarially derived probability factor which is applied to

determine the present value of the probability that the

secondary beneficiary will survive the life tenant (in this

example, the 38 year old son would survive the 65 year

old wife.) The amount of the principal of the trust is mul-

tiplied by the probability factor to determine the amount

taxable at each of the applicable tax rates

The Chief of the Inheritance Tax Division, upon written

request, will provide the probability factor in the case of

an actual decedent prior to the filing of the tax return.

Inquiries should be addressed to PA Department of

Revenue, Bureau of Individual Taxes, Inheritance Tax

Division, Dept. 280601, Harrisburg, PA 17128-0601.

The request for a probability factor must identify the

estate, date of death and bureau file number and must

be accompanied by a copy of any relevant instrument.

The facts described in Example 2 require subjective

analysis before a compromise can be reached. Since

the trustee has the power to invade principal for the

benefit of the life tenant, a reasonable determination

must be made to estimate the probable need for use of

principal. In reviewing the facts of this estate, the

Department would consider the health of the life tenant,

her average expenses, any expected extraordinary

expenses, and all future income, including the income

from the decedent’s trust. By balancing expenses

against income, a compromise could be effected on the

probability that principal would be consumed.

Similarly, in Example 3, the trustee must also consider

the potential distributions made for the benefit of the

decedent’s issue as well as the spouse (life tenant). In

this example, additional information concerning the

number of issue, their ages, respective financial situa-

tions, and related data which would have an effect on

the probability of principal distribution to the issue. Such

distributions would affect the calculation of both the life

estate and remainder interests.

Following any negotiations which are deemed neces-

sary, the Department will prepare a Compromise

Agreement for consideration by the taxpayer. The

Agreement will be sent to the person listed as corre-

spondent on the tax return along with an explanatory

letter describing how the offer was determined. Taxes

owing on all other interests will be determined and will

be set forth on a “Notice of Inheritance Tax

Appraisement, Allowance or Disallowance of

Deductions and Assessment of Tax” which will

accompany the compromise offer.

In order to consummate the Compromise Agreement, it

must be signed by the taxpayer and the compromise

tax amount must be paid within sixty (60) days of the

signing of the Agreement. Failure to meet both require-

ments will render the Agreement null and void. A copy

of the signed Agreement must accompany payment of

the compromise tax amount to the Register of Wills. If

the Agreement is signed and the tax is paid, the

Agreement shall constitute the final determination of tax

on the future interest. No further assessment notice

will be issued by the Department and all rights of

appeal shall cease.

Once issued, the Compromise Agreement furnished by

the Department of Revenue for consideration by the

taxpayer is not subject to negotiation. If the Agreement

is not acceptable, the Department of Revenue must be

notified by a letter which specifies that the Agreement is

not satisfactory, which will prompt issuance of the

“Notice of Inheritance Tax Appraisement, Allowance or

Disallowance of Deductions and Assessment of Tax.” If

the Compromise Agreement furnished for consideration

by the taxpayer is not accepted or if the Compromise

Agreement is not fully consummated by the payment of

all tax and interest due under the Agreement, the

Department will then officially assess the future interest

tax in accordance with the Compromise Agreement.

When the “Notice of Inheritance Tax Appraisement,

Allowance or Disallowance of Deductions and

Assessment of Tax” is received, the taxpayer may, with-

in 60 days of the date the assessment is received, exer-

cise the statutory right of appeal provided in 72 P.S. §

9186(b). Any liability not paid in full or under appeal will

be referred for collection at the expiration of the appeal

period or nine months after the date of death, which-

ever is later

The taxpayer is cautioned that in the case of decedents

dying on or after December 13, 1982, all inheritance

tax, including the compromise tax component, is due at

death and becomes delinquent nine months following

death (72 P.S. § 9142). The taxpayer may, therefore,

wish to consider making a payment on account of the

amount of tax which will result from the compromise

determination to obtain the benefit of the discount for

payment within three months after the date of death, or

to avoid imposition of interest. For dates of death

between December 31, 1991 and December 31, 1994,

the availability of the Spousal Poverty Credit does not

affect the future interest compromise calculation.

SCHEDULE N

SPOUSAL POVERTY CREDIT

This schedule must be used to claim the spousal pover-

ty credit which is available to estates of decedents dying

on or after January 1, 1992 and before January 1, 1995.

In order to claim the credit, complete this schedule,

furnish required supporting information and make the

election by checking Block 10 on the REV-1500 cover

sheet. If the block is not checked and Schedule N is not

completed, the credit will not be allowed.

PART I

This part is used to calculate the gross value of the

decedent’s estate for purposes of the spousal poverty

credit. This will include both taxable and nontaxable

assets in which the decedent had an interest. Do not

report assets in which the decedent had no interest dur-

ing lifetime.

Line 1

Enter the total of taxable assets listed on Line 8 of the

Recapitulation Section of the cover sheet on Line 1.

Lines 2-6

Use Lines 2 through 6 to report all of the decedent’s

assets which are not reported on the Pennsylvania

Inheritance Tax Return, regardless of their situs. In

addition to the value of property entered on Line 1,

examples of property included for purposes of calculat-

ing the $200,000 threshold are:

• The proceeds of life insurance policies

owned by the decedent on the decedent’s life

must be entered on Line 2.

• The present value of retirement benefits (not

included on Line 1) must be entered on Line 3.

Retirement benefits include pensions, retirement

plans, 401(K) plans, individual retirement

accounts, stock bonus plans, etc.

• The decedent’s fractional share of all property

jointly held by the decedent and the surviving

spouse (as joint tenants with right of survivor

ship or tenants by the entirety) calculated as if

such property was taxable, must be entered

on Line 4.

• The present value of Pennsylvania lottery

winnings must be entered on Line 5.

Other nontaxable assets must be entered on

Lines 6a through 6d. Such nontaxable assets

include:

• Real property and tangible personal property

situated outside the Commonwealth of

Pennsylvania.

• The total of any exclusions of up to $3,000 per

transferee claimed on Schedule G for transfers

within one (1) year of death.

• Adjusted service certificates and bonds.

Do not include on Lines 2 through 6 the value of prop-

erty which was already included on Line 1. Examples of

property which should not be included on Lines 1

through 6 for purposes of calculating the $200,000

threshold are:

• War risk insurance and national service life

insurance.

• Vietnam conflict pay allowance.

• Property over which the decedent held power of

appointment as donee of such power.

• Irrevocable burial funds.

• Property in which the decedent had no benefi-

cial interest.

• Irrevocable trusts over which the decedent had

no access or enjoyment.

• Lump sum death benefits and burial payments

from the Social Security Administration,

Veterans Administration or Railroad Retirement

Board.

Line 7

Add Lines 1 through 6 and enter total here.

Line 8

Enter the actual liabilities of the decedent on Line 8.

Include the items from Schedule I which are evidenced

by a written agreement. Do not include estate adminis

tration expenses. For purposes of calculating the “liabil-

ities” portion for joint obligations, the decedent’s propor-

tionate share will be allowed in the same manner autho-

rized for calculating allowable debts and deductions.

Oral debts will not be recognized as Section 9112(C)(2)

of the 1991 Inheritance and Estate Tax Act specifically

requires that actual liabilities be evidenced by a written

agreement.

Line 9

Subtract Line 8 from Line 7 to determine the net value

of the estate. Stop if Line 9 is greater than $200,000.

The estate is not eligible for the spousal poverty credit.

If Line 9 is less than $200,000 continue to Part II.

PART II

Part II of Schedule N is used to determine the average

joint exemption income of the decedent and the surviv-

ing spouse for the three (3) tax years prior to the date of

death. Income from full tax years must be furnished. Do

not furnish income from the year of the decedent’s

death unless the decedent died on the last day of the

year. For example, if a decedent dies on May 5, 1994,

the three base period tax years would be 1993, 1992

and 1991.

Information reported in Part II will be verified with the

records of the Internal Revenue Service and the PA

Department of Revenue. Submit copies of Federal

Individual Income Tax Returns for the appropriate tax

years. If the copies do not bear the signatures of both

spouses, the surviving spouse must sign the returns to

verify that the copies are true and correct. If one or both

spouses was not required to file Federal Individual

Income Tax Returns for any year in question, the estate

must submit a reasonable facsimile or pro forma of the

Federal Individual Income Tax Return which would have

been filed if income were sufficient to require filing. The

individual preparing the facsimile must verify that the

information is true and correct. Information must be

supplied for both the decedent and the spouse even if

they were not married throughout the three (3) tax years

under consideration.

A column is provided for each base year. Use Line a to

indicate the surviving spouse’s income, Line b the

decedent’s income and line c to report joint income.

Exemption income also includes income which is not

subject to income tax. Nontaxable income, such as that

from tax exempt municipal bonds, etc., is reported on

line d. Other income is reported on line e. This includes

amounts not subjected to tax by reason of the exclusion

available to eligible taxpayers over age 55 on the sale

of a personal residence. Add lines a through e and enter

the total on line f.

The average joint exemption income is calculated on

line 4. Add Lines 1f, 2f and 3f and divide the total by 3.

This is the average joint exemption income and must be

entered on Line 4(b). Stop if Line 4(b) is greater than

$40,000. The estate is not eligible to claim a spousal

poverty credit. If Line 4(b) is less than or equal to

$40,000, continue to Part III.

PART III

This part is used to calculate the amount of the spousal

poverty credit. The credit is allowed on the first

$100,000 of taxable transfers to the decedent’s surviv-

ing spouse. The amount of the taxable transfer is net of

deductions and liabilities. It is not the gross value of

assets passing to spouse. The value of taxable trans-

fers cannot exceed Line 12 of the cover sheet. Do not

include nontaxable assets such as life insurance or

jointly held assets passing to the spouse on Line 1.

For example, if husband dies and wife receives, after

deductions:

House (Joint names) . . . . . . . . . . . . . . . . .$50,000

Checking Account (Joint names) . . . . . . . . 50,000

Car (Decedent’s name) 5,000

Savings Account (Decedent’s name) . . . . . 90,000

Total received by wife . . . . . . . . . . . . . . . $195,000

Of the total value of $195,000 received by wife, only

$95,000 would be reported on Line 1 as the house and

checking account passed to the surviving spouse by

operation of law and were not subject to Pennsylvania

Inheritance tax.

Calculate the spousal credit by multiplying Line 1 by the

allowable credit percentage. The credit percentage is

determined by the date of death as follows:

Date of Death Credit Percentage

1-1-92 to 12-31-92 . . . . . . . . . . . . . . . . . .2%

1-1-93 to 12-31-93 . . . . . . . . . . . . . . . . . .4%

1-1-94 to 6-30-94 . . . . . . . . . . . . . . . . . . .6%

7-1-94 to 12-31-94 . . . . . . . . . . . . . . . . . .3%

Enter the appropriate percentage on Line 2. Multiply

Line 1 by Line 2 and enter the result on Line 3. This is

the amount of the spousal poverty credit. Transfer the

amount on Line 3 to Line 18 of the cover sheet. Verify

that the block in the upper right hand corner of the cover

sheet has been checked to indicate that the estate is

claiming a spousal poverty credit.

Lines 4 and 5 apply only to estates of nonresidents and

should be left blank for estates of residents.

Application of discount for payment within three calen-

dar months of death and interest on delinquent pay-

ments to estates claiming the spousal poverty credit is

illustrated in the following examples:

EXAMPLE 1

Principal tax due . . . . . . . . . . . . . . . . . . . .$ 10,000

Less: Spousal poverty credit . . . . . . . . . . . (1,500)

Balance due . . . . . . . . . . . . . . . . . . . . . . .$ 8,500

Less: Payment within discount period . . . . (7,500)

Discount . . . . . . . . . . . . . . . . . . . . . . . . . . (375)

Balance of tax due . . . . . . . . . . . . . . . . . . $625

Interest will accrue on the unpaid balance of $625

commencing (9) months after death.

EXAMPLE 2

Principal tax due . . . . . . . . . . . . . . . . . . . .$ 10,000

Less: Spousal poverty credit . . . . . . . . . . . (2,000)

Balance due . . . . . . . . . . . . . . . . . . . . . . .$ 8,000

Less: Payment within discount period . . . . (10,000)

Discount (calculated on actual tax liability

of $8,000) . . . . . . . . . . . . . . . . . . . . (400)

Overpayment . . . . . . . . . . . . . . . . . . . . . .$ 2,400

EXAMPLE 3

Principal tax due . . . . . . . . . . . . . . . . . . . .$ 2,000

Less: Spousal poverty credit . . . . . . . . . . (2,000)

Balance due . . . . . . . . . . . . . . . . . . . . . . . -0-

EXAMPLE 4

Principal tax due . . . . . . . . . . . . . . . . . . . .$10,000

Less: Spousal poverty credit . . . . . . . . . . . (2,000)

Payment made after discount period and

within 9 months of date of death . . . . . . . . 8,000

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -0-

Tax due . . . . . . . . . . . . . . . . . . . . . . . . . . -0-

SCHEDULE O

ELECTION TO TAX UNDER SEC. 9113(A)

ELECTION TO TAX SUBJECT PROPERTY UNDER

SECTION 9113(A) AS A TAXABLE TRANSFER BY

THIS DECEDENT: The election to tax a trust or similar

arrangement for the sole use of the surviving spouse

during the spouse’s lifetime, or portion thereof, as a

taxable transfer in the first decedent spouse’s estate

must be made by checking Block 11 on the REV-1500

cover sheet and by completing Schedule O. Failure to

check the Block 11 and file Schedule O will result in the

entire trust or similar arrangement being included as a

taxable transfer in the estate of the surviving spouse. A

separate Schedule O must be filed for each qualified

trust or similar arrangement affected by an election to

tax. Schedule O can be used for nonresident decedent

estates, as well as resident decedent estates.

Section 9113(A) of the Inheritance & Estate Tax Act of

1991, as amended by Act 21 of 1995 provides for the

inclusion of a trust or similar arrangement that benefits

only the surviving spouse during the spouse’s entire

lifetime as a taxable transfer in the estate of the surviv-

ing spouse and not as a taxable transfer in the trans-

feror’s, or first decedent spouse’s, estate. The tax on a

qualified trust or life estate arrangement is not due until

the death of the second spouse, at which time it

becomes fully taxable in his or her estate at the rate(s)

applicable to the remainder beneficiary(ies) with no

deduction of the original value of the survivor’s expired

life estate.

Section 9113(A) benefits the surviving spouse because

the payment of tax on the decedent’s assets is post-

poned until the death of the surviving spouse. In situa-

tions where the surviving spouse must rely on the trust

assets for maintenance income, the trust assets are not

depleted by the payment of tax, but instead are pre-

served in order to provide the maximum income, and

principal should an invasion of the principal, if the

instrument so authorizes, become necessary for the

surviving spouse’s benefit. Similarly, when the trust

assets are comprised of real property and limited cash

assets, the tax does not impose a burden which would

necessitate the sale of the real property, which is often

the residence of the surviving spouse.

The estate can elect to include such a trust, or similar

arrangement, or portion thereof, as a taxable transfer in

the transferor’s, or first decedent spouse’s estate. The

election to tax in the estate of the first decedent spouse

can be advantageous for tax purposes if there are

sufficient cash assets to pay the tax without imposing a

burden on the surviving spouse. Although there are

numerous considerations, including estate tax conse-

quences, it may be advantageous to make the election

to tax in the first estate since the value of the surviving

spouse’s interest in the trust or similar arrangement is

subject to tax at the spousal rate of zero percent.

Schedules K and M can be used to determine the value

of the surviving spouse’s interest.

Schedule O, which is only applicable to estates of

decedents dying on or after January 1, 1995, must be

completed if the election to tax the trust in the first

decedent spouse’s estate is made. It is not necessary to

complete this schedule if all of the property received by

the surviving spouse is transferred outright to the

spouse without the incidents of a trust or other similar

arrangement, or if the estate representative has deter-

mined that it would be more advantageous to allow the

payment of the tax on the qualified trust or similar

arrangement to be postponed as provided under the

law until the death of the second spouse (See instruc-

tions for Schedule J).

The trust or similar arrangement for which an election to

tax is being made must be clearly identified. The name

of the trust, or the paragraph or item number of the

instrument in which its terms are set forth should be

entered on Schedule O in the section below the

decedent’s name and estate file number.

Values reported on this schedule must be consistent

with Schedules K and/or M.

The value of all assets should be the fair market value

on the date of the decedent’s death net of any deduc-

tions allocable against the interests passing to the trust

or similar arrangement.

PART A: ALL INTERESTS PASSING TO THE

QUALIFIED TRUST OR SIMILAR ARRANGE-

MENT

List all property interests that pass from the decedent to

a trust or similar arrangement for the sole use of the

surviving spouse during the spouse’s entire lifetime.

Examples of these interests include, but are not limited

to:

1. Assets passing under the decedent’s will or by

intestate succession

2. Assets passing by operation of law because of the

designation of a beneficiary, such as IRA’s,

pensions, “in trust for” accounts, “payable on

death ”accounts, “transfer on death” accounts, etc.

3. Assets held in trust

4. Annuity contracts

If Schedule O includes a bequest of the residue or part

of the residue of the decedent’s estate, attach as an

exhibit a computation showing how the value of the

residue was determined.

PART B: VALUE OF TRUST OR SIMILAR

ARRANGEMENT FOR WHICH A SECTION 9113(A)

ELECTION IS BEING MADE:

List in Part B the value of a trust or similar arrangement

that passes to the surviving spouse for the spouse’s

sole use during his or her entire lifetime for which a

Section 9113(A) election is made. The value as calcu-

lated on Schedules K and M, net of any deductions allo-

cable to the surviving spouse’s interest, should be list-

ed. Specific reference should be made to items listed in

Part A to allow cross reference of the items. If the elec-

tion is made for more than one trust, please specifically

identify the individual trusts.

ERIE

Courthouse

Room 122

140 W. 6th St.

Erie, PA 16501

(814) 451-6258

FAYETTE

Courthouse

61 E. Main St.

Uniontown, PA 15401

(412) 430-1206

FOREST

Courthouse

P.O. Box 423

Tionesta, PA 16353

(814) 755-3526

FRANKLIN

Courthouse

157 Lincoln Way E.

Chambersburg, PA

17201

(717) 261-3872

FULTON

Courthouse

201 N. 2nd St.

McConnellsburg, PA

17233

(717) 485-4212

GREENE

Courthouse

Waynesburg, PA 15370

(412) 852-5283

HUNTINGDON

Courthouse

223 Penn St.

Huntingdon, PA 16652

(814) 643-2740

INDIANA

Courthouse

825 Phila. St.

Indiana, PA 15701

(412) 465-3860

ADAMS

Courthouse

111-117 Baltimore St.

Gettysburg, PA 17325

(717) 334-6781

ALLEGHENY

City-County Building

414 Grant St.

Pittsburgh, PA 15219

(412) 350-4184

ARMSTRONG

Courthouse

500 Market St.

Kittanning, PA 16201

(412) 548-3280

BEAVER

Courthouse

Third St.

Beaver, PA 15009

(412) 728-5700

BEDFORD

Courthouse

200 S. Juliana

Bedford, PA 15522

(814) 623-4836

BERKS

Berks Co. Services Ct.

633 Court St., 2nd. Fl.

Reading, PA 19601

(610) 478-6600

BLAIR

Courthouse

423 Allegheny St.

Holidaysburg, PA 16648

(814) 693-3095

BRADFORD

Courthouse

310 Main St.

Towanda, PA 18848

(717) 265-1702

BUCKS

Courthouse

Court and Main Sts.

Doylestown, PA 18901

(215) 348-6265

BUTLER

Courthouse

P.O. Box 1208

Butler, PA 16003-1208

(412) 248-5348

CAMBRIA

Courthouse

P.O. Box 298

Ebensburg, PA 15931

(814) 472-5440

CAMERON

Courthouse

Emporium, PA 15834

(814) 486-3349

CARBON

Courthouse

P.O. Box 286

Jim Thorpe, PA 18229

(717) 325-2261

CENTRE

Courthouse

Bellefonte, PA 16823

(814) 355-6724

CHESTER

Courthouse

2 N. High St., Ste. 109

West Chester, PA 19380-

3073

(610) 344-6335

CLARION

Courthouse

Main St.

Clarion, PA 16214

(814) 226-4000 Ext.

2500

CLEARFIELD

Courthouse

P.O. Box 361

Clearfield, PA 16830

(814) 765-2641 Ext. 23

CLINTON

Courthouse

P.O. Box 943

Lock Haven, PA 17745

(717) 893-4020

COLUMBIA

Courthouse

P.O. Box 380

Bloomsburg, PA 17815

(717) 389-5632

CRAWFORD

Courthouse

903 Diamond Pk.

Meadville, PA 16335

(814) 333-7338

CUMBERLAND

Courthouse

1 Courthouse Sq.

Carlisle, PA 17013-3387

(717) 240-6345

DAUPHIN

Courthouse

Room 103

Front & Mkt. Sts.

Harrisburg, PA 17101

(717) 255-2657

DELAWARE

Gov. Center Bldg.

201 W. Front St.

Media, PA 19063

(610) 891-4400

ELK

Courthouse

Main Street

P. O. Box 314

Ridgway, PA 15853

(814) 776-5349

UNION

Courthouse

Lewisburg, PA 17837

(717) 524-8761

VENANGO

Courthouse

1168 Liberty St.

Franklin, PA 16323

(814) 432-9534

WARREN

Courthouse

Warren, PA 16365

(814) 723-7550 Ext. 232

WASHINGTON

Ste. 1002

1 S. Main St.

Washington, PA 15301

(412) 228-6775

WAYNE

Courthouse

Honesdale, PA 18431

(717) 253-5970 Ext. 210

WESTMORELAND

Courthouse

301 Courthouse Sq.

Greensburg, PA 15601

(412) 830-3189

WYOMING

Courthouse

1 Courthouse Sq.

Tunkhannock, PA 18657

(717) 836-3200

YORK

Courthouse

York, PA 17401

(717) 771-9601

JEFFERSON

Courthouse

200 Main St.

Brookville, PA 15825

(814) 849-1610

JUNIATA

Courthouse

P.O. Box 68

Mifflintown, PA 17059

(717) 436-7709

LACKAWANNA

Courthouse

200 N. Washington Ave.

Scranton, PA 18503

(717) 963-6702

LANCASTER

Courthouse

P.O. Box 83480

50 N. Duke St.

Lancaster, PA 17608-

3480

(717) 299-8246

LAWRENCE

Courthouse

430 Court St.

New Castle, PA 16101

(412) 656-2159

LEBANON

Room 105

400 S. 8th St.

Lebanon, PA 17042

(717) 228-4415

LEHIGH

Courthouse

P.O. Box 1548

Allentown, PA 18105

(610) 820-3170

LUZERNE

Courthouse

Wilkes-Barre, PA 18711

(717) 825-1668

LYCOMING

Courthouse

48 W. Third St.

Williamsport, PA 17701

(717) 327-2263

MCKEAN

Courthouse

Smethport, PA 16749

(814) 887-3263

(814) 887-3260

MERCER

112 Courthouse

Mercer, PA 16137

(412) 662-3800

MIFFLIN

Courthouse

20 N. Wayne St.

Lewistown, PA 17044

(717) 242-1449

MONROE

Courthouse

Stroudsburg, PA 18360

(717) 420-3540

MONTGOMERY

Courthouse

P.O. Box 311

Norristown, PA 19404

(610) 278-3410

MONTOUR

Courthouse

29 Mill St.

Danville, PA 17821

(717) 271-3012

NORTHAMPTON

Courthouse

669 Washington St.

Easton, PA 18042

(610) 559-3094

(610) 559-3092

NORTHUMBERLAND

Courthouse

Sunbury, PA 17801

(717) 988-4140

PERRY

Courthouse

New Bloomfield, PA

17068

(717) 582-2131

PHILADELPHIA

Room 180, City Hall

Philadelphia, PA 19107

(215) 686-2918

PIKE

Courthouse

506 Broad St.

Milford, PA 18337

(717) 296-3508

POTTER

Courthouse

1 E. 2nd St.

Coudersport, PA 16915

(814) 274-8370

SCHUYLKILL

Courthouse

401 N. 2nd. St.

Pottsville, PA 17901

(717) 628-1381

SNYDER

Courthouse

Middleburg, PA 17842

(717) 837-4225

SOMERSET

Courthouse

Ste. 170

111 E. Union St.

Somerset, PA 15501

(814) 445-2096

SULLIVAN

Courthouse

Laporte, PA 18626

(717) 946-7351

SUSQUEHANNA

Courthouse

P.O. Box 218

Montrose, PA 18801

(717) 278-4600

TIOGA

Courthouse

116 Main St.

Wellsboro, PA 16901

(717) 724-9260

ALTOONA

Cricket Field Plaza Blair

615 Howard Avenue Centre

Altoona, PA 16601-4867 Fulton

(814) 946-7310 Huntingdon

Mifflin

BETHLEHEM

44 East Broad Street Lehigh

Bethlehem, PA 18018-5998 Northampton

(610) 861-2000

BRADFORD Cameron

Second Floor Elk

86 Boylston Street Forest

Bradford, PA 16701-2011 McKean

(814) 368-7113 Potter

Warren

DOYLESTOWN

Suite 104 Bucks

600 Louis Drive

Warminster, PA 18974-2846

(215) 443-2990

ERIE

Sumner Nichols Building Erie

Room 216 Crawford

155 West Eighth Street

Erie, PA 16501-1012

(814) 871-4491

GREENSBURG

15 W. Third Street, 2nd Fl.

Westmoreland

Greensburg, PA 15601-3007

(412) 832-5386

HARRISBURG Cumberland

Strawberry Square Dauphin

Harrisburg, PA 17128-0101 Perry

(717) 783-1405

INDIANA

835 Water Street, Rear Armstrong

Indiana, PA 15701-1705 Clarion

(412) 357-7600 Indiana

Jefferson

JOHNSTOWN

Third Floor Bedford

345 Main Street Cambria

Johnstown, PA 15901-1614 Clearfield

(814) 533-2495 Somerset

LANCASTER

160 East King Street Lancaster

Lancaster, PA 17602-2869 Lebanon

(717) 299-7581

NEW CASTLE

Room 201 Beaver

101 South Mercer Street Butler

New Castle, PA 16101-3837 Lawrence

(412) 656-3203 Mercer

Venango

NEWTOWN SQUARE

Suite 1 Chester

90 S. Newtown Street Rd. Delaware

(Rt. 252)

Newtown Sq., PA 19073-4092

(610) 353-4051

REVENUE DISTRICT OFFICES

The location of these offices may change. To verify the location of an office, please call the number listed for

that office or TDD# (717) 772-2252 (Hearing Impaired Only).

LOCATION COUNTIES SERVED LOCATION COUNTIES SERVED

NORRISTOWN

Stoney Creek Office Center Montgomery

Fourth Floor

151 West Marshall Street

Norristown, PA 19401-4739

(610) 270-1780

PHILADELPHIA

State Office Building, Philadelphia

Room 1206

1400 West Spring Garden St.

Philadelphia, PA 19130-4088

(215) 560-2714

PITTSBURGH

Room 216 Allegheny (Inheritance

City County Building Tax Office Only).

Pittsburgh, PA 15219-2452

(412) 565-3513

POTTSVILLE

110 East Laurel Boulevard Carbon

Pottsville, PA 17901-2527 Schuylkill

(717) 621-3175

READING

Suite 239 Berks

625 Cherry Street

Reading, PA 19602-1186

(610) 378-4401

SCRANTON

Samters Building Lackawanna

Suite 305 Monroe

101 Penn Avenue Pike

Scranton, PA 18503-1970 Susquehanna

(717) 963-4585 Wayne

SUNBURY

335 Market Street Columbia

Juniata

Sunbury, PA 17801-3466 Montour

(717) 988-5520 Northumberland

Snyder

Union

WASHINGTON

George Stewart Bldg. Fayette

75 E. Maiden Street Greene

Washington, PA 15301-4963 Washington

(412) 223-4550

WILKES-BARRE

Thomas C. Thomas Bldg.

100 E. Union Street Luzerne

Wilkes-Barre, PA 18701-3398 Wyoming

(717) 826-2466

WILLIAMSPORT

322 Locust Street Bradford

Williamsport, PA 17701-6085 Clinton

(717) 327-3475 Lycoming

Sullivan

YORK

Second Floor Adams

130 North Duke Street Franklin

York, PA 17401-1113 York

(717) 845-6661

INTERNET ADDRESS

http://www.revenue.state.pa.us.

E-MAIL ADDRESS

[email protected]

REVENUE DISTRICT OFFICES

The location of these offices may change. To verify the location of an office, please call the number listed for

that office or TDD# (717) 772-2252 (Hearing Impaired Only).

LOCATION COUNTIES SERVED LOCATION COUNTIES SERVED

Title Page

Administrative Expenses . . . . . . . . . . . . . . . . . 14

Administrative Corrections . . . . . . . . . . . . . . . . 5

Annuities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Appeal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Appraisement . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Assessment . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Assessment Control Numbers(ACN) . . . . . . . . . 5

Attorney Fees . . . . . . . . . . . . . . . . . . . . . . . . . 14

Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Charitable Bequests . . . . . . . . . . . . . . . . . . . . . 15

Citations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Closely-Held Stock . . . . . . . . . . . . . . . . . . . . . . 10

Computation of Tax . . . . . . . . . . . . . . . . . . . . . 8

Debts of Decedent . . . . . . . . . . . . . . . . . . . . . . 15

Deductions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Descendants . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Discount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Election - Spousal Trust . . . . . . . . . . . . . . . . . . 22

Estate Tax. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Executor Fees . . . . . . . . . . . . . . . . . . . . . . . . . 14

Extensions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Family Exemption . . . . . . . . . . . . . . . . . . . . . . . 14

Funeral Expenses . . . . . . . . . . . . . . . . . . . . . . 14

Future Interest Compromise Tax . . . . . . . . . . . . 17

Individual Retirement Accounts . . . . . . . . . . . . . 12

Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Jointly-Owned Property . . . . . . . . . . . . . . . . . . 12

Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Life Estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Lineal Descendants . . . . . . . . . . . . . . . . . . . . . 2

Title Page

Mortgages

Receivable . . . . . . . . . . . . . . . . . . . . . . . . 11

Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Ordering Forms . . . . . . . . . . . . . . . . . . . . . . 2

Partnership . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Payment of Tax . . . . . . . . . . . . . . . . . . . . . .

Due . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Place of . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Pension / Retirement Plans . . . . . . . . . . . . . . 12

Personal Property . . . . . . . . . . . . . . . . . . . . . 11

Proprietorship . . . . . . . . . . . . . . . . . . . . . . . . 11

Protest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Rate of Tax. . . . . . . . . . . . . . . . . . . . . . . . . . 1

Real Property . . . . . . . . . . . . . . . . . . . . . . . . 9

Refunds . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Retained Life Estates . . . . . . . . . . . . . . . . . . 13

Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Failure to File . . . . . . . . . . . . . . . . . . . . . . 3

When to File . . . . . . . . . . . . . . . . . . . . . . . 3

Where to File . . . . . . . . . . . . . . . . . . . . . . 3

Who Must File. . . . . . . . . . . . . . . . . . . . . . 2

Revenue District Offices . . . . . . . . . . . . . . . . 25

Special Use Valuation . . . . . . . . . . . . . . . . . . 9

Spousal Poverty Credit . . . . . . . . . . . . . . . . . 19

Stocks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Supplemental Returns . . . . . . . . . . . . . . . . . 3

Surviving Spouse Trust . . . . . . . . . . . . . . . . . 22

Taxable Property . . . . . . . . . . . . . . . . . . . . . . 1

Term Certain . . . . . . . . . . . . . . . . . . . . . . . . . 16

Transfers . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Trusts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

INDEX