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22. How is Maine real and tangible personal property in a pass-through entity valued for purposes of a nonresident member decedent’s estate?

As with all other assets of the decedent, Maine real and tangible personal property is valued as of the date of death (unless the alternate valuation date is elected). First, the value of the Maine property held by the pass-through entity, net of any debt secured by that property, is divided by the value of the entire entity. The result represents the fraction of Maine interests as a percentage of the total entity value. In order to calculate the value of the decedent’s estate which is taxable to Maine, the decedent member’s share of the pass-through entity value is multiplied by the Maine interest fraction. If, however, the total value of the pass-through entity is less than the value of Maine property, the value of the taxable property is limited to the decedent member’s share of the total pass-through entity value.

For example, suppose Member A is a 50% owner of Limited Liability Company Z. If the total entity value is $20 and the value of entity-owned real property in Maine is $50, the Maine interests fraction is ($50/$20) = 250%. Since we cannot have a percentage value greater than 100, the interests fraction is 100% and the total value taxable to Maine is $20. The member’s share of entity value is $20 x 50% = $10. The value of the member’s share of property taxable to Maine is $10 x 100% = $10. Had the decedent member’s estate calculated the Maine taxable property as 50% ownership times the $50 total Maine property value, the result would have been $25, greater than the member’s entire share of the pass-through entity.

(Rev. 10/24/06)