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Flashcards in Taxes: Estate Tax Deck (6)
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1

Taxes:
Estate Tax
Gross Estate

Gross Estate
- property owned by decedent at death and certain transfers.
- measure of value of estate for Estate Tax purposes
Probate Estate
- cash, stocks, assets. collection of assets for legal purposes
Property transferred by decedent at death
- transfer of property by operation of law (right of survivorship)
- other: retained life estates, revocable gifts, transfers triggered by death, and life insurance
Valuation
- included in estate @ FMV
- either on date of death or 6 months later, or when property is disposed of if before 6 months
- only alternate valuation if gross estate and tax payable will decline
- Special Use Valuation:

2

Taxes:
Estate Tax
Gross Estate
Specific Inclusions

Specific Inclusions
- Life Insurance if:
1. decedent had right to designate beneficiary or
2. decedent's estate or executor is beneficiary
- Jointly Owned Property if:
- value of interest as tenant in common
- 50% of first spouse to die
- jointly owned property with right of survivorship (unmarried), the proportion of the consideration the decedent provided
- Retained Interest
- retain control
- retained power to designate
- Transfers within 3 years of death
- transfer of retained interest, revocable transfers, and transfers of life insurance
- property included @ date of death value
- gift tax on gifts made within 3 years of death

3

Taxes:
Estate Tax
Marital Deduction

Marital Deduction
- spouse must receive property outright and control its destination
- property passing to surviving spouse as result of joint tenancy qualifies
- only net value of property subject to mortgage
- property rights that are terminable do not qualify
- deduction is unlimited
Qualified Terminal Interest Property
- election made to give spouse less than complete interest in trust
- get all trust income annually for life, but decedent determines final beneficiary
- property included in surviving spouses estate when survivor dies
No Marital Deduction for Non-Citizen Spouses
- exception: qualified domestic trust

4

Taxes:
Estate Tax
Other Deductions

Other Deductions
- debts of the estate
- final expenses (funeral and admin)
- casualty and theft losses
- charitable contributions

5

Taxes:
Estate Tax
Calculation

Calculation
Property in Gross Estate
- Expenses, Debts, & Losses
= Adj Gross Estate
- Marital & Charitable Deductions
= Taxable Estate
+ Adj Taxable Gifts
= Estate Tax Base
X Tax Rates
= Tentative Tax
- Gift Tax Paid/Payable
- Unified Credit
- Foreign Death Tax Credit
- Taxes on Prior Transfers
= Estate Tax Payable

Due 9 months after death

6

Taxes:
Estate Tax
Generation Skipping Tax

Generation Skipping Tax
- supplemental tax that prevents generation skipping
- tax in addition to gift tax

Decks in REG Class (109):