Comptroller v. Taylor
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The Court of Appeals reversed in part and affirmed in part the judgment of the Court of Special Appeals reversing the decision of the Comptroller of the Treasury assessing estate tax and penalties against a Maryland estate that included the value of a particular type of marital trust created in Michigan, holding that the value of the marital trust was subject to Maryland estate tax and that the tax court properly waived the late-filing penalty.
The trust at issue consisted of qualified terminable interest property (QTIP) that was reported on the decedent's federal estate tax return but was omitted from the estate's Maryland estate tax return. The Court of Special Appeals concluded that the Comptroller lacked the authority to tax the trust assets as part of the Maryland estate and that, because no tax was authorized, no penalty could be charged against the estate. The Court of Appeals held (1) upon the death of the decedent's surviving spouse, the QTIP trust assets were deemed to be transferred upon her death, and the transfer of such property at death was subject to the Maryland estate tax; and (2) the tax court properly waived the late-filing penalty because the personal representative sufficiently demonstrated reasonable cause.
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