Chapter 5: Flashcards
How much federal estate tax can be deferred?
5.3
Only the tax attributable to the value of the closely held business can be deferred.
What is the gross-up rule?
5.2
If a gift was made within 3 years of death, the taxes paid on the gift are included in the gross estate
What is the adjusted gross estate (AGE)?
Adjusted Gross Estate is the value of the estate after the following deductions are taken:
- Admin expenses
- Funeral expenses
- Theft and Casualty losses
- Debts, mortgages, and leans
What is an adjusted taxable gift (ATG)?
This is an adjustment to estate taxed by adding in the total amount of lifetime taxable transfers that were made post 1976
What is IRS Form 706?
The estate tax return. Three sections:
- Wealth transfers made at death
- Gift taxable wealth transfers made while living
- Calculates the final tax owed
What is the lack of marketability discount?
When there is no ready market for the sale and purchase of closely held business interests making it harder to sell and value.
What is the gross estate?
Total value of the estate before deductions
What is included in the taxable estate?
The Taxable Estate equals the AGE minus;
- State death taxes paid
- Marital deduction
- Charitable deduction
(remember that the deductions to get to AGE are:
- Admin expenses
- Funeral expenses
- Theft and Casualty losses
- Debts, mortgages, and leans
What is the key personnel discount?
When the main business member (founder) dies, the value of the business is discounted.
What is the three year inclusionary rule? (Section 2035)
Property must be included in the gross estate if
- transfered within 3 years of death
- transfer of life insurance when the original owner was also the insured
- Gross-up rule
