Starting a TX LLC to avoid inheritance taxes

[Jacob A.]

Apologies if this is the wrong forum. My mom is based in PA and so is subject to inheritance taxes. She wants to buy some property near me in TX and she suggested we put her and my name on the property so to avoid any inheritance tax. I might chip in with 20% of the capital. Questions:

1. Is the above legal and possible?

2. If we don't go this route and just buy it in our names, can we still avoid inheritance taxes?

3. What type of business should I set up? At a state level or federal?

4. Is it possible to get a loan in the name of the business? I have other rental properties in my wife and my name.

5. If we don't open a business, how do we recognize the rental incomes or losses on our tax return? I file jointly with my wife and she files jointly with my step-dad.

[Linda Weygant]

If the property is not located in Pennsylvania, then it is not subject to the Pennsylvania Inheritance Tax.  Here's the information I have on it:

PROPERTY SUBJECT TO INHERITANCE TAX All real property and all tangible personal property of a resident decedent, including but not limited to cash, automobiles, furniture, antiques, jewelry, etc., located in Pennsylvania at the time of the decedent’s death is taxable. All intangible property of a resident decedent, including stocks, bonds, bank accounts, loans receivable, etc., is also taxable regardless of where it is located at the time of the decedent’s death.

In the case of a nonresident decedent, all real property and tangible personal property located in Pennsylvania at the time of the decedent’s death is taxable. Intangible personal property of a nonresident decedent is not taxable.