Estate Trust Taxation Flashcards
Tax
How is gift taxation different from estate taxation?
Property transferred while taxpayer is living
Tax
What is the annual exclusion amount for a taxpayer’s gift taxation? What is required to get the exclusion?
$13;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
Tax
If a gift is an annuity; what value is used for the gift?
If the gift is an annuity; use Present Value to determine the gross gift
Tax
What is the basic gift tax calculation?
Gross Gifts
- 1/2 of Gifts (treated as given by spouse)
- Total # of donees x $13;000 exclusion
= Taxable gift
Tax
How is a gift taxed if a recipient gains a future ownership in the gifted property?
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
Tax
What are the deductions for gift tax; besides the annual exclusion?
Tuition and medical expenses paid directly to the provider organization (note: NOT books or dorm fees)
Political contributions
Charitable gifts
Unlimited gifts to spouse
Tax
What is the basis of gifted property for the recipient?
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
Tax
How/when are gift tax returns filed?
Calendar-year basis only
Due April 15
Tax
What are the basic characteristics of complex trust?
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
Tax
What are the basic characteristics of a Simple trust?
Income distributions mandatory
Accumulation of income disallowed
No charitable contributions
Distribution of trust corpus DISALLOWED
Allowed personal exemption of $300
Tax
How are Net Operating Losses handled in a trust?
Trusts can have a Net Operating Loss
Any unused NOL flows through to the beneficiaries
Tax
How are expenses and fees related to tax-exempt income handled in a trust?
Expenses and fees from tax-exempt income are not deductible for either a Complex or Simple Trust
Tax
When is property transferred in an estate?
After the death of the donor
Tax
What amount of a decedent’s Estate is exempt from Estate Tax?
The First $5;120;000 is exempt with a 35% tax on amount above that
Tax
How are a decedent’s medical expenses handled with respect to an estate?
Medical expenses paid after death; but incurred within 1 year of death go on decedent’s personal tax return
