Articles & Blog

Pennsylvania Inheritance Tax Business Family Exemption

Effective July 9 of this year Pennsylvania allows an exemption from inheritance tax on transfers at death of a “qualified family-owned business interests” provided that it is transferred to a “qualified transferee”. A “qualified transferee” is a decedent’s spouse, lineal descendants, siblings and siblings’ lineal descendants, ancestors and ancestors’ siblings. The qualified transferee must continue to own the business for seven years after the decedent’s date of death. If the business ceases to be owned by a qualified transferee within such seven-year period, the inheritance tax will be due from the due date of the decedent’s death and interest shall be applied from that date. The qualified transferee must certify to the Department of Revenue, every year for seven years, that he or she continues to own the qualified business. A “qualified family-owned business interest” is a proprietorship or entity that has fewer than 50 full-time employees; a book value of less than $5 million; has been in existence at least five years prior to the date of death of decedent; and wholly owned by the decedent or by the decedent and his family who meet the definition of a qualified transferee. An entity may also be a “qualified family-owned business interests” provided that it must be engaged in a business which is not the management of investments or income-producing assets owned by the entity.

Leave a Reply