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Gift/Inheritance Tax

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1. Where do I send my tax payment?

Mail your payment to:
Tennessee Department of Revenue
Andrew Jackson Building
500 Deaderick St.
Nashville, TN 37242

2. What must be included on the return?

All real and personal property in which the decedent owned or has an interest must be included on the tax return. Example of taxable property:

  • Real estate
  • Cash
  • Bank accounts even if located outside Tennessee
  • Certificates of deposit plus accrued interest
  • Money
  • Stocks, bonds
  • Life insurance payable to named beneficiaries or to the estate
  • Mortgages, notes receivable
  • Debts due the decedent
  • Household goods
  • Livestock
  • Growing crops
  • Farm machinery
  • Automobiles
  • Income tax refunds
  • Boats, travel trailers
  • Royalties
  • Jewelry
  • Antiques
  • Cash surrender value of life insurance policies owned by decedent on another's life
  • Business interests including sole proprietorships and partnership interests

3. How must property be valued on the tax return?

All property, real and personal, shall be appraised at its full and true value at the date of death of the decedent. Stocks and bonds listed on recognized exchanges shall be valued at the mean between the high and low sales prices on the date of death or the weighted average between the nearest business days of such exchange on such date. There is a provision for alternate valuation date, which is six months after the decedent's death, if the executor or administrator elects.

4. What about gifts made before death - are they taxable?

Any gift made within three years of death is included at the date of gift net the applicable exemptions. The amount of the gross estate is increased by the amount of gift tax paid; however, any gift tax paid is a credit against any inheritance tax payable.

5. Is a gift tax return required the same year as date of death?


6. What deductions are allowed?

  • Funeral expenses
  • Attorney's fees
  • Personal representative's fees
  • Debts which constituted lawful claims against the estate
  • Real property taxes
  • Mortgages
  • Federal income taxes
  • Appraisal fees
  • Court costs

7. Are selling expenses of real property deductible?

Only when the will directs that real property be sold (not when the representative is only given authority) or when necessary for administration of the estate.

8. If the decedent was a resident of Tennessee, is property located outside the state taxable?

All intangible property located outside Tennessee is taxable. Real property and tangible personal property outside Tennessee are not taxable.

9. What about a nonresident owning property in Tennessee?

The only property taxable in Tennessee to a nonresident is real property and tangible personalty. Tangible personalty means such property that has an actual situs here, i.e. livestock, farm machinery, etc.

10. What is the exemption, if the decedent was a nonresident of Tennessee?

The exemption shall be apportioned in the ratio that the value of the property included in the gross estate bears to the value of all the property that would have been included in the gross estate if the decedent had been a resident of this state.

Example - The nonresident decedent has a gross estate of $900,000 in 2001 - real property in Tennessee, a farm, has a value of $200,000 - cattle on the farm has a value of $35,000; real property outside Tennessee has a value of $150,000. Tennessee ratio of $235,000 to $750,000 ($900,000 less $150,000) = .31333 x $675,000 = $211,500. Tax is due on $23,500.

11. Are there classes of beneficiaries? No distinction is made in classes for Inheritance.

For gift tax purposes, Tennessee allows a per donee exemption of $11,000 for gifts made in 2002 through 2005; a $12,000 per donee exemption made in 2006 through 2008; and a $13,000 per donee exemption after January 1, 2009. Exception: In the case of a future interest, only one Class A exemption of $10,000 is allowed and only one Class B exemption of $3,000 is allowed.

12. What about property included in the estate that has been previously taxed?

Credit is allowed on property included in the gross estate that was previously taxed within five years. The credit for previously paid tax computation is the lesser of the following:

  1. the tax paid in the previous estate multiplied by the result of the total property amount transferred to the present estate divided by the taxable estate of the prior estate, or
  2. the tax due in the present estate multiplied by the result of the total property amount received from the prior estate divided by the taxable estate of the present estate. The five-year period is computed from the date of death of the prior decedent and not from the date of payment of such tax.

13. Are any documents required to be filed with the return?

If the decedent died testate, file a copy of the will with the return. Other supplemental documents should be submitted. Examples include Form 712 for insurance policies, trust and power of appointment instruments, and other documents referred to in the instructions for each schedule. If these documents are not filed with the return, the processing of the return may be delayed.

14. Who is responsible for the return?

The executor, administrator or personal representative is responsible regardless of whether an attorney or CPA is retained.

15. If there is no will nor probate administration, who files the return?

If there is no executor or administrator appointed, qualified and acting in Tennessee, then the person in possession of estate assets must verify and sign the return.

16. How do you get an extension to file the return?

An automatic extension is granted, provided that either an Application for Extension of Time to File Inheritance Tax Return (INH 304 under Forms and Publications) or a copy of the federal extension (Form 4768) is attached to the return when it is filed by the extended due date.  Granting of an extension by the commissioner does not affect the liability of the estate for interest.

17. How can I request that interest be waived?

There is no provision in the statute to waive interest. All taxes not paid within nine months after the death of the decedent will bear interest at the statutory rate per annum, which interest cannot be waived or excused.

18. If all of my property is in a revocable living trust and not subject to probate, is it exempt from inheritance tax?

No. The fact that property is not a probate asset does not exempt it from inheritance tax; any power reserved to the decedent to revoke, alter or amend is taxable.

19. What about jointly owned real and personal property?

All jointly owned property, whether real estate, tangible personal property, bank accounts, stock, bonds, etc. must be reported on the appropriate schedule and is included to the extent of the decedent's ownership.

20. I have added my children's names to all my certificates of deposit in order to remove from my estate - do I owe gift tax?

You would owe gift tax only if you actually transferred the CDs to your children. Retaining your name on the CDs is not a completed gift; thereby, nothing is removed from your estate.

21. How long does it take to get a closure certificate after filing an inheritance tax return?

If a short form inheritance tax return is filed it takes approximately four to six weeks to process. A long form inheritance tax return will take longer. The statute of limitations for assessment is three years from December 31 of the year in which the return is filed.

22. I'm trying to transfer stock owned by a deceased person and the stockbroker is requesting an Inheritance Tax Consent to Transfer.  How do I obtain a consent?

Effective November 4, 2013, you will be able to use our online services to obtain an Inheritance Tax Consent to Transfer (formerly known as an Inheritance Tax Release). To apply, click here. Within 7 to 10 business days, the department will review the application and either approve or deny it. If the application is approved and consent is given, the applicant will receive an email directing him to print a copy of the consent for his records. If the application is denied and consent is not given, the applicant will be contacted by email or by phone. If you cannot apply online or need help applying online, please call (615) 532-6444 for further instructions.