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Wealth Transfer Taxation
California does not impose a gift tax. Cal. Revenue and Taxation Code § 13301 (West 2000). However, the state does charge a death tax. This tax is defined as tax charged account of the transfer or shifting of economic benefits in property at death. Cal. Revenue and Taxation Code § 13830(c) (West 2000). Whenever federal estate tax is owed, the California estate tax imposed is equal to the maximum amount allowed of the Credit for State Death Taxes. The combined state and federal death tax liability shall not exceed the amount of total death tax owed to the federal government were a state tax not charged. Cal. Revenue and Taxation Code § 13302 (West 2000). This system, where the state tax is equal to the Federal state tax credit, is known as a pickup tax. The state death tax only applies to property located in California. The formulas for determining the amount of death tax tax owed if the decedent has property located both in California and in other states is given in Cal. Revenue and Taxation Code § 13303.
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