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Regulation > 12.4 - Estate Tax > Flashcards

12.4 - Estate Tax Flashcards

1
Q

Estate Tax

True or False >>>

Estate = Principal

A

True

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2
Q

Estate Tax

Is estate tax and estate income tax the same?

A

No

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3
Q

Estate Tax

Define estate tax

A
  • tax levied on the principal net value of the estate of a a deceased person before distributing to heirs or beneficiaries
  • also known as a one time transfer tax
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4
Q

Estate Tax Computation

Calculate taxable estate

A

Gross Estate

  • Deductions (Expenses, claims, taxes, casualty & theft losses

Charitable bequests, marital deduction)

= Taxable Estate

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5
Q

Estate Tax Computation

Calculate total taxable transfers

A

=Taxable Estate

+Taxable gifts made after 1976

=Total taxable transfers

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6
Q

Estate Tax Computation

Calculate tentative estate tax

A

Total taxable transfers

* Tax rate

= Tentative estate tax

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7
Q

Estate Tax Computation

Calculate estate tax liability

A

Tentative estate tax

  • Gift taxes paid on post-1976 gifts
  • Applicable credit amount
  • Other credits

= Estate tax liability

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8
Q

Gross Estate

What is all included in the gross estate?

HINT: 5 bullet points

A
  • FMV of all property in which decedent owned a beneficial interest
  • Value of surviving spouse’s interest in property as dower or curtesy
  • 50% of property held as joint tenants by spouses or as tenants by the entirety regardless of the amount of consideration provided by each spouse
  • Value of property interests are included where decedent had general POA
  • Gift taxes paid on gifts within 3 years before death
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9
Q

Gross Estate

Gross estate includes 50% of property held as joint tenants by spouses or as tenants by the entirety regardless of the amount of consideration provided by each spouse. Define the treatment if couple is not married

A

then value of property to be included in gross estate is equal to percentage of purchase price paid by that decedent

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10
Q

Gross Estate

Define dower

A
  • Entitles surviving wife to a portion of lands her husband owned & possessed during marriage
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11
Q

Gross Estate

Define curtesy

A
  • Entitles a surviving husband to a life estate in all of his wife’s land if they had children
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12
Q

Inter Vivos Transfer

What are inter vivos transfers?

A
  • Transfers between the living
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13
Q

Inter Vivos Transfer

True or False >>>

  • Gross estate includes assets transferred if decedent retained power over asset
A

True

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14
Q

Inter Vivos Transfer

Define the rights or interests that would belong to the decedent if they retained power over assets

A
  • Right to designate
  • Reversionary interest
  • Ability to alter, amend, revoke or terminate transfer
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15
Q

Valuing Gross Estate

What value is used when valuing the gross estate?

A
  • FMV of assets
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16
Q

Valuing Gross Estate

What is the valuation date for valuing the gross estate?

A
  • Valuation date can vary
17
Q

Deductions from Gross Estate

Define alternate valuation date

A
  • Executor elects another valuation date which is 6 months after decedent’s death as opposed to using date of death as valuation date
18
Q

Deductions from Gross Estate

Identify the 6 deductions from the gross estate

A
  • Expenses, claims and taxes
  • Certain expenses of selling property
  • Administration / funeral expenses
  • Medical expenses
  • Charitable contributions
  • Marital transfers
19
Q

Deductions from Gross Estate

Are federal estate taxes or income taxes paid on income received after death deductible from the gross estate?

A

No

20
Q

Deductions from Gross Estate

In the case of marital transfers, how are deductions for the value of any interest in property that passes from the decedent to the surviving spouse treated?

A
  • is allowed to the extent interest is included in the gross estate
21
Q

Deductions from Gross Estate

How are medical expenses incurred but not paid prior to death treated?

A
  • deductible on decedent’s final tax return
22
Q

Deductions from Gross Estate

Identify certain property selling expenses that are considered deductions from the gross estate

A
  • To pay decedent’s debts
  • To pay administrative expenses
  • To pay taxes
  • Preserve the estate
  • Effect distribution
23
Q

Applicable Credit Amount

What is the applicable credit amount of ACA for 2016?

A

$2,125,800

24
Q

Applicable Credit Amount

What is the purpose of the ACA or applicable credit amount?

A
  • Minimizes / eliminates most estate tax
    • Used to eliminate estate tax below $5 million
25
Q

Applicable Credit Amount

How much a decedent’s estate is effectively tax-free if the maximum ACA is taken?

A

$5.45 million

26
Q

Applicable Credit Amount

Who is mainly affected by the estate tax and why?

A
  • Because of credit mainly wealthy taxpayers are effected by estate tax
27
Q

Applicable Credit Amount

True or False >>>

  • Unused exclusion of deceased spouses $5.45 million may be used by surviving spouse
A

True -

  • Surviving spouse could possibly have an available exclusion of $10.9 million
28
Q

Estate Tax Return

When is the estate tax return due?

A
  • within 9 months of death
29
Q

Estate Tax Return

Are extensions available for estate tax returns?

A
  • 6-month extension is available
30
Q

Estate Tax Return

Identify the form used to file an estate tax return

A
  • Must file form 706 if gross estate exceeds a threshold of $5.45 million for 2016
31
Q

Estate Tax Return

What is the extension time for making payments on an estate tax return?

A

1 year past due date

32
Q

Are there ever exceptions to the payment date being extended past the extension due date? If so, when are payments due?

A
  • Reasonable cause may extend up to 10 years

Regulation (67 decks)

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