Estate Tax Flashcards
If the alternate valuation election is made, it is possible for some but not all of the assets to be included in the decedent’s estate at a higher FMV than on the date of death.
A taxpayer may elect an alternate valuation date only if it will result in a lower value of the gross estate and lower taxes paid than if the election is not made. Assets disposed of under alternate valuation date rules before the 6 month time frame are valued at FMV (usually the sales price) as of the date of disposition, not the FMV as of the date of death. Only answer B is correct.
Karen died on June 3, 2023. The executor of her estate is her brother, Felix, who was the named executor and beneficiary in her final will. What form must Felix file with the IRS, to notify the IRS of his fiduciary relationship?
Form 56
This form is used to provide notification to the IRS of the creation or termination of a fiduciary relationship under section 6903 and to give notice of qualification under section 6036. By filing Form 56, Felix informs the IRS of his role as the executor and beneficiary of Karen’s estate. 🌟
alternative valuation date to reduce taxes on the estate.
Six months after death
What amount can be deducted on this estate income tax return as an exemption?
The federal government allows a set $600 exemption on the filing of an estate income tax return.
Which of the following is NOT a credit against gross estate tax in determining net estate tax?
Credits reduce the estate tax by the credit amount. Contributions to charity are a deduction from the gross estate, not a credit against tax. The following credits reduce the tax:
The applicable credit (also called the Unified credit),
Credit for foreign death taxes paid, and
Credit for tax on prior transfers.
In determining the taxable amount of the estate, which of the following cannot be deducted?
For an estate tax return (Form 706), a number of specific expenses and other costs can be deducted from the gross estate value. These deductions include: funeral expenses, administrative expenses, debts and mortgages, casualty losses, charitable bequests, and marital deduction. A personal exemption is not deducted.
dates will be the alternate valuation date June 1, 20X1
The alternate valuation date (if assets not sold) is 6 months from the date of death, which is December 1, 20X1.
Mr. Brown died on September 30, 2023. His gross estate was valued at $10,670,000. Unless an extension is granted, a Federal Estate Tax Return (Form 706) must be filed on or before:
An estate tax return, Form 706, must be filed for decedents who were citizens or residents of the United States at the time of death and the gross estate, plus any adjusted taxable gifts (post-1976 gifts), is more than the filing requirement for the year of death (same as the applicable exclusion amount). An estate tax return is not necessary if the gross estate plus adjusted taxable gifts are less than $12,920,000 for decedents dying in 2023.
James A. Artwall died on April 1, Year One. Because of the size of the estate, no distributions were made until after July 1, Year Two. For valuation purposes, the executor of the estate selected the alternative valuation date. On what date must the estate assets be valued?
Normally, estate assets are valued as of the date of death. However, the executor does have the right to value the assets at an alternative date. This occurs when the overall value has gone down so that money can be saved on the amount of estate taxes to be paid. The alternative date is six months after death or the date of conveyance, whichever comes first. The property is not conveyed for over a year so the assets should be valued on October 1, Year One, six months after death.
Mr. Brown died on September 30, 2023. His gross estate was valued at $10,670,000. Unless an extension is granted, a Federal Estate Tax Return (Form 706) must be filed on or before:
April 15, 2024
January 15, 2024
June 30, 2024
A Federal Estate Tax Return does not have to be filed
An estate tax return, Form 706, must be filed for decedents who were citizens or residents of the United States at the time of death and the gross estate, plus any adjusted taxable gifts (post-1976 gifts), is more than the filing requirement for the year of death (same as the applicable exclusion amount). An estate tax return is not necessary if the gross estate plus adjusted taxable gifts are less than $12,920,000 for decedents dying in 2023.
