1. Subject to the limitations in subsections 2 and 3, there shall be deducted from the gross value of the estate only the liabilities defined as follows:
a. The debts owing by the decedent at the time of death, the local and state taxes accrued before the decedent’s death, the federal estate tax and federal taxes owing by the decedent, a reasonable sum for funeral expenses, the allowance for surviving spouse and minor children granted by the probate court or its judge, court costs, and any other administration expenses allowable pursuant to section 2053 of the Internal Revenue Code.\n\nTue Dec 09 22:11:08 2025 Iowa Code 2026, Chapter 450 (43, 1) §450.12, INHERITANCE TAX 8\n\n b. A liability shall not be deducted unless the personal representative or other person filing the inheritance tax return as provided in section 450.22 certifies that it has been paid or, if not paid, the director of revenue is satisfied that it will be paid. If the amount of liabilities deductible under this section exceeds the amount of property subject to the payment of the liabilities, the excess shall be deducted from other property included in the gross estate on a prorated basis that the gross value of each item of other property bears to the total gross value of all the other property. Subject to the previous provision, a liability is deductible whether or not the liability is legally enforceable against the decedent’s estate.
2. If the decedent’s gross estate includes property with a situs outside of Iowa, the liabilities deductible under subsection 1 shall be prorated on the basis that the gross value of property with a situs in Iowa bears to the total gross estate. Only the Iowa portion of the liabilities shall be deductible in computing the tax imposed by this chapter. However, a liability secured by a lien on property shall be allocated to the state where the property has a situs and shall not be prorated except to the extent the liability exceeds the value of the property.
3. If a liability under subsection 1 is secured by property, or a portion of property, not included in the decedent’s gross estate, only that portion of the liability attributable to property or a portion of property included in the decedent’s gross estate is deductible in computing the tax imposed by this chapter. 83 Acts, ch 177, §6, 38; 90 Acts, ch 1232, §21; 94 Acts, ch 1165, §32, 49; 95 Acts, ch 63, §2; 2003 Acts, ch 145, §286 Referred to in §450.90\n\n 450.13 through 450.16 Reserved. \n
Notes of Decisions
Van Duzer v. Iowa State Dep't of Revenue, 369 N.W.2d 407 (Iowa 1985).
· cites it 4× “Such apportionment is required as a result of Iowa Code section 450.12(1) (1977) which provides, in part: There shall be deducted from the gross value of the estate .”
TREMEL v. Iowa Dep't of Revenue, 785 N.W.2d 690 (Iowa 2010).
· cites it 2× “We find that Iowa Code section 450.12 permits the IDOR to assess and collect the estate tax from the beneficiaries of a life insurance policy, and therefore, we affirm the district court judgment affirming the final order of the Director of the IDOR.”
Sinclair v. Iowa Dep't of Revenue, 201 N.W.2d 77 (Iowa 1972).
· cites it 6× “The deductions allowed by trial court are not within the scope of “debts” defined in § 450.12, The Code. Taxes for 1970, payable in 1971, were neither a debt owed by decedent at his death (in 1934) nor were they due from the estate in January of that year.”
In Re the Est. of Martin, 710 N.W.2d 536 (Iowa 2006).
· cites it 4× “3, without reduction for the liabilities specified in Iowa Code section 450.12. Lynch, 491 N.W.2d at 159 (emphasis added).”
Fed. Land Bank of Omaha v. Sleister, 444 N.W.2d 504 (Iowa 1989).
· cites it 2× “” Debts such as taxes are not deducted to determine fair market value but are deducted before imposition of the tax under a separate provision found in section 450.12. Similarly, we believe fair market value under section 654.”
In Re the Est. of Devries, 203 N.W.2d 308 (Iowa 1972).
· cites it 2× “The executor filed an application setting up the Department’s refusal to recognize the allowance, despite the provisions of section 450.12, The Code, 1966. She asked that it be compelled to do so.”
In Re the Est. of McAllister, 214 N.W.2d 142 (Iowa 1974).
· cites it 2× “not debts as required by Code section 450.12(1) which provides in part: “Deductions of debts.”
State Tax Comm'n v. Ritchie, 68 N.W.2d 289 (Iowa 1955).
· cites it 11× “Determination of the question involved depends finally on the definition of the word “debt” or “indebtedness” in Code sections 450.12(2) and 450.89, Iowa Code 1950 (now 1954) and whether the definition should be broadened to include expenses of administration as appellants claim.”
Eide v. Hottman, 132 N.W.2d 755 (Iowa 1965).
· cites it 2× “There shall be deducted from the gross value of the estate as fixed by the inheritance tax appraisers appointed under the provisions of this chapter, or as fixed by the court, the debts defined as follows: “1.”
Bair v. Randall, 258 N.W.2d 333 (Iowa 1977).
· cites it 2× “Randall’s attorney fees and costs are not deductible because they were not approved by the court as required by § 450.12, The Code. This is a strange position for the Department to take now because the Assistant Attorney General conceded during trial that Mrs.”
— Iowa Code § 450.12(1) — 3 cases
Van Duzer v. Iowa State Dep't of Revenue, 369 N.W.2d 407 (Iowa 1985).
“Such apportionment is required as a result of Iowa Code section 450.12(1) (1977) which provides, in part: There shall be deducted from the gross value of the estate .”
Sinclair v. Iowa Dep't of Revenue, 201 N.W.2d 77 (Iowa 1972).
“The deductions allowed by trial court are not within the scope of “debts” defined in § 450.12, The Code. Taxes for 1970, payable in 1971, were neither a debt owed by decedent at his death (in 1934) nor were they due from the estate in January of that year.”
In Re the Est. of McAllister, 214 N.W.2d 142 (Iowa 1974).
“not debts as required by Code section 450.12(1) which provides in part: “Deductions of debts.”
— Iowa Code § 450.12(2) — 1 case
State Tax Comm'n v. Ritchie, 68 N.W.2d 289 (Iowa 1955).
“Determination of the question involved depends finally on the definition of the word “debt” or “indebtedness” in Code sections 450.12(2) and 450.89, Iowa Code 1950 (now 1954) and whether the definition should be broadened to include expenses of administration as appellants claim.”
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