Estate Trust Taxation Flashcards
Property transferred while taxpayer is living
Gift and Estate Taxation
$14,000 per year per spouse to each individual
In order to get the exclusion, the recipient must immediately acquire a present interest in the property and get unrestricted access to the property and all of its benefits
Gift and Estate Taxation
If the Gift is an annuity, use Present Value to determine the gross Gift
Gift and Estate Taxation
Gross Gifts
- 1/2 of Gifts (treated as given by spouse)
- Total # of donees x $14,000 exclusion
= Taxable Gift
Gift and Estate Taxation
Recipient must gain ownership and all rights to property to get the annual exclusion. If recipient merely gains a future ownership, then the present value of the Gift is 100% taxable to donor and cannot exclude from Gift tax calc
Gift and Estate Taxation
Tuition and medical expenses paid directly to the provider organization (note: NOT books or dorm fees)
Political contributions
Charitable Gifts
Unlimited Gifts to spouse
Gift and Estate Taxation
If a loss on sale, basis is FMV on the date of the Gift
If a gain on sale, basis is same as donor’s basis
No G/L if donor basis is less than sales price, and sales price is less than FMV @ Gift date
Gift and Estate Taxation
Calendar-year basis only
Due April 15
Gift and Estate Taxation
Income distributions are optional
Accumulation of income ok
Charitable contributions ok
Contributions using tax-exempt income are not deductible
Allowed personal exemption of $100
Key Point: Distribution of Trust corpus (principal) ok
Gift and Estate Taxation
Income distributions mandatory
Accumulation of income disallowed
No charitable contributions
Distribution of Trust corpus DISALLOWED
Allowed personal exemption of $300
Gift and Estate Taxation
Trusts can have a Net Operating Loss
Any unused NOL flows through to the beneficiaries
Gift and Estate Taxation
Expenses and fees from tax-exempt income are not deductible for either a Complex or Simple Trust
Gift and Estate Taxation
After the death of the donor
Gift and Estate Taxation
The First $5,250,000 is exempt with a 40% tax on amount above that
Gift and Estate Taxation
Medical expenses paid after death, but incurred within 1 year of death go on decedents personal tax return
Gift and Estate Taxation
Estates can have a Net Operating Loss
Any unused NOL flows through to the beneficiaries
Gift and Estate Taxation
Cash and Property FMV at death, or alternate valuation.
Gift and Estate Taxation
When two non-spouses jointly own property
FMV at death X % Ownership = Amount in Estate
Gift and Estate Taxation
1/2 of marital assets go to deceased spouses Estate
Gift and Estate Taxation
A, B, and C own property
If A dies, FMV of As share goes to heirs
Gift and Estate Taxation
Property received through inheritance not income to recipient
Property value is FMV at date of death or 6 months later
If property is sold prior to 6 month date and the alternative date is used, FMV at date of sale is used to value property
Basis in property automatically assumes LT holding period
Gift and Estate Taxation
DNI = Taxable Income Expenses (from income production)
Trust beneficiaries only pay tax if earnings are distributed
Estate beneficiaries pay tax on DNI, regardless if distributed
Gift and Estate Taxation
If a tax exempt organization has more than $1,000 of UBI, it must file a Form 990-T
Gift and Estate Taxation
Organized and Operated exclusively for exempt purposes
No earnings can benefit an individual or private shareholder
Cant attempt to influence legislation as a major part of its activities
Cant campaign politically
Gift and Estate Taxation
