M7 Estate and Gift Transactions Flashcards
Gift exclusion amount (per year/per donee)
$14,000 each
28,000 if MFJ
Unified estate and gift tax credit amount from the first ___ amount
$2,141,800
$5,490,000
Estate must file form ___ if the gross value of the state plus historical taxable gifts exceeds what amount (2017)?
Form 706
FMV
$5,490,000
Due date for Estate Tax form 706
9 months after decedent’s death
“Birth and Death =9 months”
Gross estate value (two options)
FMV at date of death OR
Alternative valuation elected which is the earlier of the date property distributed or six months after the date of death
Gross Estate. If property owned jointly with a spouse, what amount is included in the gross estate?
50% FMV
Estate Transfer Tax Calculation
Gross estate FMV Assets
------------------------------------------------------------ Adjusted gross estate Net worth
----------------------------- --------------------- Taxable Estate Remainder Adjusted taxable gifts ------------------------------- Tentative tax base at death *Uniform tax rates * Tax Rate ----------------------------- ---------------------- Tentative Estate Tax Estate tax
------------------------------ Gross estate tax (about 2,000,000) ------------------------------- --------------------------- Estate tax due Federal Estate Tax
Medical and administrative expenses can be deducted where? (2 options)
Reduce gross estate OR
Individual’s final 1040
Two unlimited estate deductions
- Charitable
- Marital transfers
Estate tax due calculation
40% * [tentative tax base at death] - $5,490,000
When gifts given exceed the $14,000 exclusion amount, what form is filed?
Form 709 Gift Tax
Gift Tax. Annual exclusion amount is not available for what gifts?
FUTURE
Gift-splitting amount?
28,000 (MFJ)
Gift Tax. 4 Gifts that are Unlimited Exclusions
1) Payment DIRECTLY paid to educational institution
2) Payments DIRECTLY paid to health care provider
3) Charitable Gifts
4) Marital Gifts
Gifts. Type of gifts that qualify for the annual exclusion and subject to the gift tax
COMPLETE gifts
Gifts. Type of gifts that are included in the gross estate and not subject to the gift tax
INCOMPLETE gifts
Gifts. Tax consequences to the recipient.
NONE - no income –> basis = NBV
Calculation of Tax due on current gifts
Gross Gifts in a Calendar Year (at FMV)
Less: exclusion of 14,000 per donee per year
LESS: unlimited marital deduction of gift to donor’s spouse
LESS: charitable gifts
——————————————————-
=Taxable gifts this year
PLUS: Taxable gifts of prior years
——————————————–
=Cumulative lifetime gifts
Tax on Cumulative Lifetime gifts (Calculate) LESS: gift tax paid on prior gifts LESS: applicable credit ---------------------------------------- = Tax due on current gifts
Designed to prevent an individual from escaping an entire generation of gift and estate tax.
Generation-Skipping Transfer Tax (GSTT)
GSTT applies when individuals transfer property to a person who is ___ generations younger than the donor or transferor
TWO
Trustee or Transferor pays the GSTT
GSTT exemption amount
Amount if MFJ (if split the GSTT)
5,490,000
MAX: 10,980,000
“split GSTT”
