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ATTORNEYS FOR APPELLANT: STEVE CARTER ATTORNEY GENERAL OF INDIANA KRISTEN M. KEMP DEPUTY ATTORNEY GENERAL Indianapolis, IN

ATTORNEYS FOR APPELLEE: THOMAS C. BIGLEY, JR. JASON H. GUTHRIE SHARPNACK BIGLEY STROH & WASHBURN LLP Columbus, Indiana

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IN THE INDIANA TAX COURT
_____________________________________________________________________ INDIANA DEPARTMENT OF STATE REVENUE, INHERITANCE TAX DIVISION, ) ) ) ) Appellant, ) ) v. ) Cause No. 49T10-0608-TA-72 ) THE ESTATE OF ELIZABETH J. ) BRANDEWIEDE, ) ) Appellee. ) _____________________________________________________________________ ON APPEAL FROM THE BARTHOLOMEW COUNTY SUPERIOR COURT The Honorable Chris D. Monroe, Judge Cause No. 03D01-0503-ES-406 FOR PUBLICATION September 6, 2007 FISHER, J. The Indiana Department of State Revenue, Inheritance Tax Division

(Department) appeals the Bartholomew County Superior Court's (probate court) order determining the Indiana inheritance tax liability of the Estate of Elizabeth J. Brandewiede (Estate). The issue before the Court is whether the probate court erred when it determined that the Estate properly allocated its deductions.

FACTS AND PROCEDURAL HISTORY Elizabeth J. Brandewiede died testate on February 23, 2005. Her will contained the following relevant provisions: ITEM I I direct the payment of all my just debts, my last illness and funeral expenses and costs of administration of my estate as soon after my death as may conveniently be done. ***** ITEM V I give, devise and bequeath to my nephew, Edward Brandewiede, and my niece, Marietta Brandewiede, in equal shares, share and share alike, any shares of the common stock of Arvin Industries, Inc., any old coins that I may own at the time of my death, all my antique furnishings, jewelry, silver flatware, dishes[,] and household goods then in my residence. ITEM VI I give, devise and bequeath to my friend, Josie Hudson . . . the phonograph record collection and any automobile I may own at the time of my death. ITEM VII I give, devise and bequeath all the residue remaining after the bequests made herein, including the property hereinbefore disposed of if the disposition thereof by reason of lapse or other causes shall fail to take effect, to the Columbus Ward of the Church of Jesus Christ of Latterday Saints. (Appellant's App. at 15-16.) At the time of her death, Elizabeth also owned two

retirement accounts (IRAs). Elizabeth had previously named Edward and Marietta as the beneficiaries of one of the IRAs, and Marietta's four children, Jackie, Joann, Daniel and Jimmy, as the beneficiaries of the other IRA. (See Appellant's App. at 10.) On November 29, 2005, the Estate filed its Indiana inheritance tax return. The return indicated that the gross value of the Estate was $113,835.79 and that it was entitled to deductions of $50,228.75. (See Appellant's App. at 5, 12.) The Estate

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allocated $46,059.25 of these deductions to the $46,059.25 value of the combined probate and non-probate interests received by Edward, Marietta, Jackie, Joann, Daniel and Jimmy 1 ; the remaining deductions of $4,169.50 were allocated to the residuary. (See Appellant's App. at 6.) In allocating the deductions in this manner, the Estate reported a zero Indiana inheritance tax liability: first, the otherwise taxable transfers to Marietta, Edward, Jackie, Joann, Daniel and Jimmy had been reduced to a zero value; second, everything that remained in the residuary was exempt from tax because it was transferred to the Columbus Ward of the Church of Jesus Christ of Latterday Saints. See IND. CODE ANN.

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