Comptroller of the Treasury v. Phillips, 384 Md. 583

Summary

The Maryland Court of Appeals considered whether Maryland may impose estate tax on an estate with no federal estate tax liability because the estate used the federal credit for tax on prior transfers. Interpreting Maryland Tax-General Article § 7-304, the court held that Maryland's estate tax is a federal pick-up tax and may not be assessed when no federal estate tax would be payable without use of the federal credit for state death taxes. The court affirmed the decisions of the Maryland Tax Court and the Circuit Court for Talbot County.

Holdings

1. When an estate has no federal estate tax liability without utilizing the federal credit for state death taxes, the Comptroller may not assess Maryland estate tax under Md. Code, Tax-General § 7-304.

Questions Presented

1. Whether Maryland may impose estate tax when an estate has no federal estate tax liability because the federal credit for tax on prior transfers eliminated the federal estate tax.

Disposition

affirmed