TABLE OF RATES IN EFFECT AUGUST 2, 1921.

CHAPTER 821, L. 1921.

An act to be known as the "inheritance tax act," to establish a tax on gifts, legacies, inheritances, bequests, devises, successions and transfers, to provide for its collection and to direct the disposition of its proceeds; to provide for the enforcement of liens created by this act and by any act hereby repealed and for suits to quiet title against claims of liens arising hereunder, or under an act hereby repealed; and to repeal chapter five hundred eighty-nine of the laws of the session of the legislature of California of 1917, approved May 23, 1917, known as the "inheritance tax act," and to repeal all acts and parts of acts in conflict with this act.

(Approved June 3, 1921. In effect August 2, 1921.)

Note.-Section 1 is given as amended by act 438, laws of 1923, and S. B. 571, laws of 1925.

Section 2 is as amended by the 1925 act.

Section 22 is inserted by the 1925 act, is effective July 24, 1925, and imposes an additional flat tax of two per cent on the transfer of stock in California corporations by nonresident decedents.

The balance of the statute remains unaltered since its adoption in 1921.

The people of the State of California do enact as follows:

Sec. 1. (1) This act shall be known as the "inheritance tax act."

(2) The words "estate" and "property" as used in this act shall be taken to mean the real and personal property or interest therein of the testator, intestate, grantor, bargainor, vendor, or donor passing or transferred to individual legatees, devisees, heirs, next of kin, grantees, donees, vendees, or cussessors, and shall include all personal property within or without the state or subject to the jurisdiction thereof; provided, that for the purpose of this act upon the death of the husband one-half of the community property is taxable under the provisions of this act.

Provided, further, that when the husband by testamentary disposition of the community property forces the surviving wife to elect whether to take under his will or by operation of law, the one-half or less of the community property, which the wife takes under the said will in lieu of the one-half belonging to her under the provisions of section one thousand four hundred one of the civil code, shall not be taxable under the provisions of this act; the provisions of this proviso shall also extend to those estates now in probate and in which the orders fixing tax have not become final judgments as provided by this act:

Note. This paragraph inserted by act of 1925.

Provided, further, the one-half of the community property which belongs to the surviving spouse, under the provisions of section one thousand four hundred one of the civil code, and, in the case of the death of the wife, the community interest which goes to her husband under the provisions of section one thousand four hundred two of the civil code in the absence of her testamentary disposition thereof to another or others, shall not be deemed to pass to such surviving spouse as heir, but shall for the purpose of this act, be deemed to go, pass or be transferred for a valuable consideration, and the said one-half of the community property and the interest last mentioned going as aforesaid to the surviving husband shall not be subject to the provisions of this act:

Provided, further, that for the purposes of this act, personal property wherever situated, heretofore or hereafter acquired while domociled elsewhere, which would not have been the separate property of either husband or wife if acquired while domiciled in this state shall be deemed to be community property.

Note. This paragraph inserted by act of 1925.

Provided, further, that in case of a transfer of the community property from one spouse to the other within the meaning of subdivision three (3) or five (5) of section two of this act, one-half of the community property so transferred shall not be subject to the provisions of this act; and provided, further, that the presumption that property acquired by either husband or wife after marriage is community property, shall not obtain for the purpose of this act as against any claim by the state for the tax hereby imposed; but the burden of proving such property to be community property shall rest upon the person claiming the same to be community property.

(3) The word "transfer" as used in this act shall be taken to include the passing of property or any interest therein, in possession or enjoyment, present or future, by inheritance, descent, devise, succession, bequest, grant, deed, bargain, sale, gift, or appointment in the manner herein described.

(4) The word "decedent'' as used in this act shall include the testator, intestate, grantor, bargainor, vendor, or donor.

(5) The words "county treasurer" and "inheritance tax appraiser," as used in this

act, shall be taken to mean the treasurer or the inheritance tax appraiser of the county of the superior court having jurisdiction as provided in section fifteen of this act.

(6) This act shall become effective and in force contemporaneously with the taking effect of amendments to sections one thousand four hundred one and one thousand four hundred two of the civil code, which amendments were enacted at the forty-fifty session of the legislature of the State of California and known as chapter eighteen of the statutes of 1923, and not otherwise.

§ 2. A tax shall be and is hereby imposed upon the transfer of any property, real, personal or mixed, or of any interest therein or income therefrom in trust or otherwise, to persons, institutions or corporations, not hereinafter exempted, to be paid to the treasurer of the proper county, as hereinafter directed, for the use of the state, said taxes to be upon the market value of such property at the rates hereinafter prescribed and only upon the excess over the exemptions hereinafter granted, in the following cases:

(1) When the transfer is by will or by the intestate or homestead laws of this state, from any person dying seized or possessed of the property while a resident of the state, or by any order of court setting apart property, and making or granting extra family allowances, pursuant to article one, chapter five, title eleven, part three of the code of civil procedure.

(2) When the transfer is by will or intestate laws of property within this state and the decedent was a nonresident of the state at the time of his death, or by any order of court setting apart property, and making or granting extra family allowances, pursuant to article one, chapter five, title eleven, part three of the code of civil procedure.

Note. Subdivisions 1 and 2 as amended by act of 1925.

(3) When the transfer is of property made by a resident, or by a nonresident when such nonresident's property is within this state, by deed, grant, bargain, sale, assignment or gift, made without valuable and adequate consideration (i. e., a consideration equal in money or in money's worth to the full value of the property transferred):

(a) In contemplation of the death of the grantor, vendor, assignor or donor, or, (b) Intended to take effect in possession or enjoyment at or after such death. When such person, institution or corporation becomes beneficially entitled in possession or expectancy to any property or the income therefrom, by any such transfer, whether made before or after the passage of this act.

(4) The words "contemplation of death," as used in this act, shall be taken to include that expectancy of death which actuates the mind of a person on the execution of his will, and in nowise shall said words be limited and restricted to that expectancy of death which actuates the mind of a person making a gift causa mortis; and it is hereby declared to be the intent and purpose of this act to tax any and all transfers which are made in lieu of or to avoid the passing of property transferred by testate

or intestate laws.

(5) Whenever property, real or personal, is held in the joint names of two or more persons, or is deposited in banks or other institutions or depositaries in the joint names of two or more persons and payable to either or the survivor, upon the death of one of such persons, the right of the surviving joint tenant or joint tenants, person or persons to the immediate ownership or possession and enjoyment of such property shall be deemed a transfer taxable under the provisions of this act in the same manner as though the whole property to which such transfer relates belonged absolutely to the deceased joint tenant or joint depositor and had been devised or bequeathed to the surviving joint tenant or joint tenants, person or persons, by such deceased joint tenant or joint depositor by will, excepting therefrom such part thereof as may be proved by the surviving joint tenant or joint tenants to have originally belonged to him or them and never to have belonged to the decedent.

(6) Whenever any person, trustee or corporation shall exercise a power of appointment derived from any disposition of property made either before or after the passage of this act, such appointment, when made, shall be deemed a transfer taxable under the provisions of this act, in the same manner as though the property to which such appointment relates belonged absolutely to the donee of such power, and had been bequeathed or devised by such donee by will; and whenever any person, trustee or corporation possessing such power of appointment so derived shall omit or fail to exercise the same within the time provided therefor, in whole or in part, a transfer taxable under the provisions of this act shall be deemed to take place to the extent of such omission or failure, in the same manner as though the persons, trustees or corporations thereby becoming entitled to the possession or enjoyment of the property to which such power related had succeeded thereto by a will of the donee of the power failing to exercise such power, taking effect at the time of such omission or failure. (7) Whenever a decedent appoints or names one or more executors or trustees, and

makes a bequest or devise of property to them in lieu of commissions or allowances, which otherwise would be liable to said tax, or appoints them his residuary legatees, and said bequest, devise, or residuary legacies exceeds what would be a reasonable compensation for their services, such excess over and above the exemptions herein provided for shall be liable to said tax; and the superior court in which the probate proceedings are pending shall fix the compensation.

(8) Where any property shall, after the passage of this act, be transferred subject to any charge, estate or interest, determinable by the death of any person, or at any period ascertainable only by reference to death, the increase accruing to any person or corporation upon the extinction or determination of such charge, estate or interest, shall be deemed a transfer of property taxable under the provisions of this act in the same manner as though the person or corporation beneficially entitled thereto had then acquired such increase from the person from whom the title to their respective estates or interests is derived.

(9) When more than one transfer within the meaning of any of the preceding subdivisions of this section has been made, either before or after the passage of this act, by a decedent to one person, the tax shall be imposed upon the aggregate market value of all of the property so transferred to such person in the same manner and to the same extent as if all of the property so transferred were actually transferred by one transfer.

(10) In determining the market value of the property transferred, the following deductions and no others shall be made from the appraised value thereof:

(a) Debts of decedent owing at date of death;

(b) Expenses of funeral and last illness;

(c) All state, county and municipal taxes which are a lien against said property at the date of death;

(d) The ordinary expenses of administration, including the ordinary fees allowed executors and administrators, and the ordinary fees of their attorneys under the provisions of sections one thousand six hundred eighteen and one thousand six hundred nineteen of the code of civil procedure of California;

(e) The amount due or paid the government of the United States as a federal inheritance or estate tax; provided, however, that the amount of such tax allowable herein as a deduction shall be limited to a computation thereof (commencing at the primary rates) made by the acting state inheritance tax appraiser upon his own valuations of that portion of such property only, the transfer of which is taxable under the provisions of this act, by applying to such valuations the exemptions and rates of the federal inheritance or estate tax in force at the date of such transfer;

(f) The amount due or paid any state or etates of the United States (excepting California) as a state inheritance, succession or transfer tax; provided, however, that the amount of such tax allowable herein as a deduction shall be limited to a computation thereof (commencing at the primary rates) made by the acting state inheritance tax appraiser upon his own valuations of that portion of such property only, the transfer of which is taxable under the provisions of this act, by applying to such valuations the exemptions and rates of such state inheritance, succession or transfer tax in force at the date of such transfer.

Sec. 22. (1) All shares of stock in corporations organized under the laws of this state and any interest therein or income therefrom, in trust or otherwise, belonging to persons whose domicile is without the state shall, upon the death of the owner, be subject to a tax of two per centum of its actual value upon its transfer to persons, institutions or corporations, not hereinafter exempted, to be paid to the treasurer of the proper county, as hereinafter directed, for the use of the state.

(2) The provisions of this act for the enforcement and collection of any other tax hereunder shall apply to the enfarcement and collection of the above tax, and all interest charges and penalties provided for in this act shall apply also to the enforcement and collection of this tax.

(3) The provisions of section two pertaining to transfers in contemplation of death, transfers intended to take effect in possession or enjoyment at or after death and the provisions of subdivisions five, six, seven, eight and nine of said section two shall be applicable to the tax upon the transfer provided for by this section. The provisions of section four, five and six and of subdivision ten of section two shall not be applicable to the tax provided for in this section.

Note.-Above section inserted by act of 1925, effective July 24, 1925.

Sec. 3. Such taxes shall be and remain a lien upon the property passed or transferred until paid; provided, however, that where property is sold under and in accordance with the provisions of chapter seven, title eleven, part three, of the code of civil procedure the lien herein provided for shall be released from the property so sold and shall attach to the proceeds of such sale, and the per

son to whom the property passes or is transferred, except as herein in this seetion provided, and all administrators, executors and trustees of every estate so transferred or passed, shall be liable for any and all such taxes until the same shall have been paid as hereinafter directed. The provisions of the code of civil procedure relative to the limitation of time of enforcing a civil remedy shall not apply to any proceeding or action taken to levy, appraise, assess, determine, or enforce the collection of any tax or penalty prescribed by this act, and this section shall be construed as having been in effect as of date of the original enactment of the inheritance tax law; provided, that unless sued for within five years after they are due and legally demandable, such taxes, or any taxes accruing under any act herein repealed, shall cease to be a lien as against any bona fide purchaser of said property; and provided, that; no such lien shall cease within two years from the date of the passage of this act.

Sec. 4. When the property or any beneficial interest therein so passed or transferred exceeds in value the exemption hereinaftr specified and shall not exceed in value twenty-five thousand dollars, the tax hereby imposed shall be:

(1) Where the person or persons entitled to any beneficial interest in such property shall be the husband, wife, lineal ancestor, lineal issue of the decedent or any child adopted as such in conformity with the laws of this state, or any child to whom such decedent for not less than ten years prior to such transfer stood in the mutually acknowledged relation of a parent (provided, however, such relationship began at or before the child's fifteenth birthday, and was continuous for said ten years thereafter), or any lineal issue of such adopted or mutually acknowledged child, at the rate of one per centum of the clear value of such interest in such property.

(2) Where the person or persons entitled to any beneficial interest in such property shall be the brother or sister or a descendant of a brother or sister of a decedent, a wife or widow of a son, or the husband of a daughter of the decedent at the rate of three per centum of the clear value of such interest in such property.

(3) Where the person or persons entitled to any beneficial interest in such property shall be the brother or sister of the father or mother, or the descendant of a brother or. sister of the father or mother of the decedent, at the rate of four per centum of the clear value of such interest in such property.

(4) Where the person or persons entitled to any beneficial interest in such property shall be in any other degree of collateral consanguinity than is hereinbefore stated or shall be a stranger in blood to the decedent, or shall be a body politic or corporate, at the rate of five per centum of the clear value of such interest in such property.

§ 5. (1) When the market value of such property or interest passed or transferred to any of the persons mentioned in subdivision one of section four exceeds twenty-five thousand dollars, the rates of tax upon such excess shall be as follows:

(a) Upon all in excess of twenty-five thousand dollars and up to fifty thousand dollars, two per centum of such excess.

(b) Upon all in excess of fifty thousand dollars and up to one hundred thousand dollars, four per centum of such excess.

(c) Upon all in excess of one hundred thousand dollars and up to two hundred thousand dollars, seven per centum of such excess.

(d) Upon all in excess of two hundred thousand dollars and up to five hundred thousand dollars, ten per centum of such excess.

(e) Upon all in excess of five hundred thousand dollars, twelve per centum of such

excess.

(2) When the market value of such property or interest passed or transferred to any of the persons mentioned in subdivision two of section four exceeds twenty-five thousand dollars, the rates of tax upon such excess shall be as follows:

(a) Upon all in excess of twenty-five thousand dollars and up to fifty thousand dollars, six per centum of such excess.

(b) Upon all in excess of fifty thousand dollars and up to one hundred thousand dollars, nine per centum of such excess.

(c) Upon all in excess of one hundred thousand dollars and up to two hundred thousand dollars, twelve per centum of such excess.

(d) Upon all in excess of two hundred thousand dollars, twelve per centum of such

excess.

(e) Upon all in excess of five hundred thousand dollars, eighteen per cetum of such

excess.

(3) When the market value of such property or interest passed or transferred to any of the persons mentioned in subdivision three of section four exceeds twenty-five thousand dollars, the rates of tax upon such excess shall be as follows:

(a) Upon all in excess of twenty-five thousand dollars and up to fifty thousand dollars, eight per centum of such excess.

(b) Upon all in excess of fifty thousand dollars and up to one hundred thousand dollars, ten per centum of such excess.