Gift and estate tax Flashcards
If gift tax return is required, what form is it filed on?
Form 709
When is gift tax return due?
The return is due on April 15th for gifts made in the previous calendar year. If donor were to die, the return is due on the filing date of the estate return (generally 9 months following the date of death).
What is the annual exclusion amount?
$14,000
Unlimited exclusions can be made for?
Political Organizations
Tuitions-pay directly to the educational institution
Medical Costs-pay directly to the medical care provider
Unlimited maritial exclusion
Charitable contribution deduction
Unified Credit- $5.43 million per taxpayer.
If a donor were to die, the return is due when?
The return is due on the filling date of the estate return, generally 9 months following the date of death.
How is the gross estate valued?
Gross estate is valued at FMV at the date of death,unless the alternative valuation date (6 months after date of death) is elected.
What is income with respect to decedent? (IRD)
IRD is right to income which was earned by the decedent but not previously taxed.
What are some deductions on the Estate return? FAD LUCS
FAD LUCS Funeral Expenses Administrative Expenses Debts and Mortgages Casualty losses during estate State Death Taxes Charitable Beequests Unlimited Marital Deduction
What form are Estate tax returns filed on?
Form 706
When are Estate Tax Returns filed?
Due 9 months after the date of death unless an extension has been granted.
What is step up basis?
Step up in basis is denied for death bed gifts (within year of death) where the individual gifting the property is a beneficiary of the same gifted property.
What is the holding period for assets acquired by inheritances?
Always Long term
What is generation skipping tax?
Designed to prevent individuals from escaping an entire generation of gift and estate taxes
Flat 35% tax
The $14,000 exclusion is per year in total or per person?
Per person. If you give Jones 18, Craig 15 and Kande 6. Your total exclusion for the year is 14+14+6=34
When preparing a gift tax return is the AB or FMV included in the gross amount of gifts?
The amount of a gift made in property is the fair market value of the property at the date of the gift. The fair market value is that which would occur in an arm’s-length transaction between a willing buyer and a willing seller in the normal market.
Income with Respect to a Decedent should be included on which tax returns?
Both the fiduciary income tax return and the estate tax return.
What year end must trusts and estates use?
Trust must use calendar year and estates can adopt a fiscal year.
Proceeds of a life insurance policy payable to the estate’s executor, as the estate’s representative, are
The gross estate includes amounts receivable by all beneficiaries from insurance under policies on the life of the decedent with respect to which the proceeds are receivable by or for the benefit of the estate. If they are payable to the executor, they are receivable for the benefit of the estate and are always included in the decedent’s gross estate.
The gross estate includes proceeds of insurance on the decedent’s life if:
The gross estate includes proceeds of insurance on the decedent’s life if either
(1) the proceeds are payable to or for the estate or
(2) the decedent had any incident of ownership in the policy at death. Since the decedent was not the beneficiary and had no incidents of ownership with respect to the policy, it is excluded from the gross estate.
When is an executor required to file form 706?
The executor is required to file Form 706, United States Estate Tax Return, if the gross estate at the decedent’s death exceeds $5.43 million. Adjusted taxable gifts made by the decedent during his or her lifetime reduce this $5.43 million threshold if the applicable credit amount reduced inter vivos gift tax liability.
What are generation skipping transfer taxes?
The generation-skipping transfer tax (GSTT) is imposed, as a separate tax in addition to the gift and estate taxes, on generation-skipping transfers, which are any taxable distributions or terminations with respect to a generation-skipping trust or direct skips. It’s imposed as a separate tax in addition to the gift and estate taxes.
