CHAPTER 5 - ESTATE AND GIFT TAX BASICS Flashcards
WHAT DOES THE PORTABILITY RULE ALLOW
UNUSED SPOUSE’S UNIFIED CREDIT CAN BE CARRIED OVER TO LIVING SPOUSE’S ESTATE IF AN ESTATE TAX RETURN IS FILED THAT REQUESTS THE TRANSFER
A TRANSFER OF PROPERTY FOR LESS THAN FULL AND ADEQUATE CONSIDERATION IN MONEY OR MONEY’S WORTH
GIFT
D SELLS HER HOUSE TO HER SON FOR $100,000 WHEN THE FMV OF THE HOUSE IS $150,000. WHAT IS THE GIFT
50 - 14 = 36
WHAT IS THE DIFFERENCE BETWEEN GIFT AND BUSINESS TRANSACTION
DONATIVE INTENT
HOW IS GIFTED PROPERTY VALUED
HIGHEST AND BEST USE AT DATE OF GIFT
WHAT IS THE VALUE OF THE GIFT TAX EXCLUSION IN ESTATE TAX PLANNING
ALLOWS THE TAXPAYER TO REMOVE SIGNIFICANT ASSETS FROM HIS OR HER GORSS ESTATE
WHAT IS A REQUIREMENT OF THE USAGE OF THE GIFT TAX EXCLUSION
THE TRANSFERRED PROPERTY MUST BE A PRESENT INTEREST, NOT A FUTURE INTEREST
WHAT IS THE BENEFIT OF A CRUMMEY TRUST
ALLOWS THE BENEFICIARY TO WITHDRAW FROM THE TRUST FOR A CERTAIN PERIOD OF TIME BEFORE BEING SEALED
QUALIFIES FOR ANNUAL EXCLUSION
WHAT IS THE REQUIREMENT TO ALLOW FOR UNLIMITED GIFT TRANSFERS FOR EDUCATIONAL AND MEDICAL EXPENSES
THE GIFTS MUST BE PAID DIRECTLY TO THE EDUCATIONAL OR MEDICAL SERVICE PROVIDER
THE RELATIONSHIP DOESN’T MATTER
WHAT IS ONE LIMIT OF THE MARITAL DEDUCTION FOR GIFTS
THERE CAN NOT BE A TERMINABLE INTEREST, SUCH AS DIVORCE
WHAT IS THE GENERAL RULE FOR GROSS ESTATE INCLUSION
IF THE PROPERTY IS TRANSFERRABLE AT DEATH, IT IS INCLUDED
INTEREST CAN USUALLY BE EXCLUDED BECAUSE THEY ARE NONTRANSFERABLE
HOW IS JOINT TENANCY PROPERTY HANDLED WITH REGARDS TO THE GROSS ESTATE
THE PROPERTY IS INCLUDED IN THE DECEDENT’S ESTATE UNLESS THE SURVIVING JOINT TNENAT CAN PROVE CONTRIBUTION
HOW IS JOINT TENANCY PROPERTY HANDLED IF THE TENANTS ARE MARRIED
ONLY HALF OF THE JOINT PROPERTY IS INCLUDED IN GROSS ESTATE REGARDLESS OF CONTRIBUTION
HOW IS LIFE INSURANCE TREATED FOR THE GROSS ESTATE
THE POLICY IS USUALLY INCLUDED IF:
THE POLICY IS PAYBLE TO THE ESTATE OR BENEFIT OF THE INSURED’S ESTATE
THE INSURED POSSESSED OWNERSHIP AT TIME OF DEATH
WHAT HAPPENS IF THE LIFE INSURANCE POLICY IS TRANSFERRED WITHIN 3 YEARS OF DEATH
THE FACE AMOUNT OF THE POLICY IS INCLUDED IN THE DECEDENTS GROSS ESTATE
HOW ARE IRA AND OTHER RETIREMENT BENEFITS TREATED FOR THE GROSS ESTATE
THE BENEFITS ARE INCLUDED IN THE DECEDENT’S GROSS ESTATE
WHAT ARE THE GENERAL, ASCERTAINABLE, AND SPECIAL POWERS OF APPOINTMENT
GENERAL - HAPPINESS (INCLUDED)
ASCERTAINABLE - HEMS (NOT INCLUDED)
SPECIAL - CAN NOT BENEFIT (NOT INCLUDED)
WHAT INTERESTS ARE CONDIDERED TO HAVE A STRING
1 - LIFE ESTATE OR RIGHT TO INCOME
2 - REVERSIONARY INTERESTS
3 - POWER TO REVOKE, ALTER, AMEND, OR TERMINATE GIFT
D TRANSFERRED HIS HOME TO HIS CHILD AND RETAINED THE RIGHT TO LIVE IN THE HOUSE FOR LIFE. HOW MUCH IS INCLUDED IN D’S GROSS ESTATE
FMV OF HOME
WHAT IS A REVERSIONARY INTEREST
1 - POSSESSION OR ENJOYMENT BY ANOTHER CAN ONLY BE OBTAINED BY SURVIVING THE DECEDENT
2 - THE DECEDENT RETAINED A POSSIBILITY THAT THE PROPERTY WOULD REVERT TO HIM
3 - VALUE OF REVERSIONARY INTEREST EXCEEDS 5% OF ENTIRE PROPERTY
WHEN CAN THE ALTERNATE VALUATION DATE BE USED
ELECTION REDUCES THE VALUE OF THE GROSS ESTATE AND ESTATE TAXES
6 MOS AFTER THE DOD IF NO PROPERTY IS DIST
IF PROPERTY IS DIST, ITS THE DIST DATE
WHAT IS THE TERMINABLE TRUST RULE
MARITAL DEDUCTION IS NOT AVAILABLE FOR INTERESTS THAT TERMINATE OR FAIL UPON THE LAPSE OF TIME OR THE OCCURRENCE OF AN EVENT
WHAT ARE THE GIFT BASIS CALCULATIONS (GAIN, LOSS, DEPR)
GAIN = DONOR'S BASIS LOSS = LESSER OF DONOR OR FMV DEPR = DONOR'S BASIS
