North Carolina Section 6166 Notes

North Carolina Estate Tax and Section 6166 Deferrals

Last Updated: 29 April 2015

Forms A-101, the North Carolina estate tax return, are available on the North Carolina Department of Revenue website for dates of death from 1999 through 2012 (except for 2010). Older Forms are PDF print files only, while Forms for subsequent years are either PDF files or fill-in Forms and the most recent are fill-in only.

Through 2009 the maximum North Carolina estate tax was equal to the maximum credit for state death tax that would have been allowable on Federal estate tax returns, Forms 706, for deaths occurring in 2001. The computation of the North Carolina estate tax remained the same from 1999 through 2009 despite the phase-out reductions in the Federal state death tax credit from 2002 through 2004 and its elimination in 2005. 

  • For dates of death from 1999 through December 31, 2001, the maximum North Carolina estate tax was equal to the maximum Internal Revenue Code (IRC) section 2011 credit for state death tax. The estate tax return, Form A-101 (2001), simply refers to the allowable section 2011 state death tax credit in the computation of North Carolina estate tax.
  • For deaths occurring in 2002 through 2004, the North Carolina estate tax computation diverged from the Federal section 2011 credit computation. While the Federal section 2011 credit for state death tax was phased out 25% per year from 2002 through 2004, the North Carolina estate tax continued to rely on the full state death tax credit amount as in 2001; see Form A-101 (2004).
  • For estates of decedents dying from 2005 through 2009, inclusive, Form A-101 (2009) is used. The North Carolina estate tax remained the same as the Federal credit for state death tax that would have been allowable had the death occurred in 2001.
  • There is no North Carolina estate tax return for estates of decedents dying in 2010. But note that, although there is no North Carolina estate tax return filed for those who died during 2010, North Carolina law conforms to the exclusion amounts and gives estates that chose to pay federal estate tax and receive the stepped-up basis in the property passing through the estate to receive the stepped-up basis for North Carolina purposes.
  • For dates of death in 2011 and 2012 Form A-101 (2012) is used. The exemption amounts match those allowable on the Federal estate tax return - $5,000,000 in 2011 and $5,120,000 in 2012 - before the North Carolina estate tax is computed using the 2001 credit for state death tax table.
  • For dates of death on or after January 1, 2013, the North Carolina estate tax has been repealed.
  • NOTE: In the event links to the estate tax forms on the North Carolina Department of Revenue website shown aboveare broken, back-up PDF files are available here on this website:

 


The North Carolina Section 6166 Election and Deferral

A section 6166 deferral of the North Carolina estate tax is allowed in the same form and manner as is a concurrent Federal 6166 deferral, except that there are no special low interest rates charged on the deferred North Carolina tax - interest accrues at the regular underpayment interest rates on the deferred state tax. The regular underpayment interest rate has been 5% since July 1, 2008, which will continue through June 30, 2013. The North Carolina interest rates must be determined every 6 months beginning January 1 and July 1.

North Carolina follows the Federal section 6166 election parameters. Annual installments of the deferred tax are due at the same time and in the same proportions as are the Federal installments. If under the Federal 6166 deferral interest only is paid for the first 4 years of the deferral period, interest only is likewise due North Carolina for the first 4 years of its deferral period. If payment of the Federal deferred tax is accelerated for any reason, so is the payment of the deferred North Carolina tax. If payment of the Federal estate tax has not been deferred under IRC section 6166, payment of the North Carolina estate tax cannot be deferred.