New York Estate Tax Cases
Last updated: 21 Oct 2025 •
New York Estate Tax — Case Notes & Practitioner Commentary
New York’s estate tax is codified in Tax Law Article 26 with regulations in 20 NYCRR and administrative guidance from the Department of Taxation and Finance (DTF). Reported appellate decisions centered narrowly on Article 26 are limited; in practice, advisors rely on statute, regulations, and DTF forms/instructions for Form ET-706. Below are “authorities-first” case-style notes on the issues that most often matter in filings and audits.
Framework & Federal Conformity (Tax Law Article 26)
What it’s about
Article 26 sets the estate tax base using federal concepts as a starting point, then applies New York-specific rules (basic exclusion amount, gift addback for certain years, and the well-known “cliff”).
Holding / Rule
New York computes a state estate tax on a NY-taxable estate derived from the federal taxable estate, subject to NY adjustments and the state’s exclusion mechanics.
Comment
Always begin with ET-706 instructions for the year of death. Model the basic exclusion amount (BEA) and test for the cliff impact when the NY taxable estate exceeds the BEA by a small margin.
Nonresident Situs & Apportionment (NY Situs Definitions)
What it’s about
Nonresidents are taxed on New York-situs property only. Real property is taxed where located; tangible personal property generally where situated; most intangibles track domicile absent special business situs rules.
Holding / Rule
Returns mirror federal schedules and then limit the base to NY-situs assets for nonresidents, with deductions allocated consistently to NY property where required.
Comment
Document title, possession, and location. For art, boats, or collectibles, maintain custody/location records. Align with the Nonresident Guide for practical allocation examples.
NY QTIP Elections & Portability (Practice)
What it’s about
New York permits state-level QTIP elections even where no federal Form 706 is required for the decedent, to secure deferral for the surviving spouse under NY law.
Holding / Rule
NY follows federal QTIP concepts but maintains its own election mechanics on ET-706. Portability is not recognized at the NY state level; only federal portability exists.
Comment
Coordinate federal and NY statements. If no federal filing is required, include a NY-only QTIP election statement consistent with the trust’s income requirements and NY instructions.
Gift Addback & the NY “Cliff” (Computation Mechanics)
What it’s about
NY requires adding back certain taxable gifts made within a lookback window for specified years. The cliff can disallow the benefit of the exclusion if the NY taxable estate slightly exceeds the BEA.
Holding / Rule
Where the lookback applies, gifts increase the NY tax base and can trigger or worsen the cliff effect. Estates just above the BEA may pay tax on nearly the entire amount, not merely the excess.
Comment
Stress-test the computation with and without gifts. Consider charitable/marital planning, disclaimers, or timing strategies in pre-mortem planning to avoid falling off the cliff.
Administration Expenses, Claims & Probate Timing (Practice)
What it’s about
Deductibility of fees, commissions, and claims depends on proper documentation and Surrogate’s Court orders where relevant.
Holding / Rule
DTF expects substantiation consistent with federal rules (orders, invoices, proof of payment). Court treatment of fiduciary commissions and creditor claims affects deductibility on ET-706.
Comment
Calendar creditor windows and needed court approvals. If items are contingent or disputed, model the deduction timing and potential amendment.
Valuation & Alternate Valuation Date (Practice)
What it’s about
Fair market value at the valuation date (or alternate date, if elected federally) drives both federal and NY computations.
Holding / Rule
NY relies on federal valuation scaffolding; robust appraisals for New York real property and high-value tangibles are essential to defend the reported base.
Comment
Use qualified local appraisers and reconcile federal and NY attachments to avoid mismatch questions. Maintain Forms 712 and any business interest appraisals.
References
- New York Tax Law — Article 26 (Estate Tax): state framework, BEA, gift addback, and cliff mechanics.
- 20 NYCRR (Estate Tax Regulations): elections, deductions, and filing procedures.
- NY DTF — Estate Tax (Form ET-706) instructions and forms (including extension and lien-release processes).
- IRS Form 706 & Instructions (federal reference for conformity points).
- New York Surrogate’s Court practice materials — fiduciary commissions and claim administration (practice reference).