Estate of McVey v. Dep’t of Revenue, Fin. & Admin. Cabinet

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The Department of Revenue assessed additional inheritance taxes on an estate. The court of appeals affirmed the Department’s assessment of tax. At issue on appeal was whether inheritance taxes may be deducted from the value of distributive shares of an estate and whether inheritance tax paid from the estate on behalf of a beneficiary - a bequest of tax - is itself a taxable event. The Supreme Court affirmed, holding (1) a reviewing court does not owe any deference to the Kentucky Board of Tax Appeals as to questions of law; (2) inheritance taxes paid by the estate on behalf of a beneficiary of the estate are not “costs of administration” under a will’s tax-exoneration provision but, rather, are separate bequests that are subject to inheritance taxes; (3) the payment of inheritance tax by an estate on behalf of a beneficiary under a tax-exoneration clause is itself a taxable “bequest of tax”; and (4) like the Department, the court of appeals did not properly apply the law to the facts of this case, but because the end result of the court of appeals’ opinion was to uphold the Department’s assessment of additional tax, its judgment upholding the assessment is affirmed. View "Estate of McVey v. Dep’t of Revenue, Fin. & Admin. Cabinet" on Justia Law

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