Maryland Estate Tax Deferred for Transfers of Qualified Agricultural Property

Recently released on September 9, 2011, Maryland taxpayers are now eligible to receive a 4 year deferral on estate taxes owed on qualified agricultural property as defined by Title 7, Section 307(e) of the Tax-General Article.  This deferral is only available for decedents dying after December 31, 2010 and before January 1, 2012.  Outlined in Senate Bill 396 (Chapter 554, Acts of 2010), the new tax act permits individuals who receive property by bequest, and intend to use that property for farming purposes, to defer payment of estate taxes, tax-free for four years.  At the end of that four year period, the estate tax due would be payable over the next three years.  The total amount of estate tax deferred would be determined by calculating that percentage of the gross estate the real property is responsible for and then multiplying that percentage by the amount of estate tax due.  That total would be the amount available for deferral up to $375,000.

Property eligible for this deferral must be used for farming purposes to qualify.  Farming purposes is defined by 2032A(e)(5) of the Internal Revenue Code as:

“(A) cultivating the soil or raising or harvesting any agricultural or horticultural commodity (including the raising, shearing, feeding, caring for, training, and management of animals) on a farm;

(B) handling, drying, packing, grading, or storing on a farm any agricultural or horticultural commodity in its unmanufactured state, but only if the owner, tenant, or operator of the farm regularly produces more than one-half of the commodity so treated; and

(C)  (i) the planting, cultivating, caring for, or cutting of trees, or (ii) the preparation (other than milling) of trees for market.”

If you, or someone you know, received agricultural property by bequest from a decedent dying after December 31, 2010, please consider this deferral.  We can assist you in determining the eligibility of the property, and completing and filing the Application for Payment Deferral for Maryland, Qualified Agricultural Property.

-  Adam Abramowitz, JD and Gary Altman, Esq.

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