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One Year rule of ownership on inheritance tax rules in Pennsylvania

Upper Darby, PA |

My mother purchased a CD 11 months prior to her death. I am co-owner of this CD. She purchased this with the proceeds of a prior CD also co-owned by me which was rolled into this new CD. How does the one year of ownership apply in this case?

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Attorney answers 2


You are referring the PIT rule that pulls back gifts made within one year of death. Here, if you can show there was a gift to you via the prior CD more than one year from death, then it would not be subect to the one year rule. You need to document this adequately if questioned. If successful, you would only pay tax on 1/2 of the CD in mom's PIT return.

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You can add the previous term of ownership of the first CD to that of the second CD so long as you can prove the like ownership through bank statements etc. THis should allow you to get the more favorable tax treatment of joint ownership for more than one year prior to death and only 1/2 of the value will be subject to PA Inh. Tax.

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