M7 Estate and Gift Transactions

Question 1

Gift exclusion amount (per year/per donee)

Answer 1

$14,000 each

28,000 if MFJ

Question 2

Unified estate and gift tax credit amount from the first ___ amount

Answer 2

$2,141,800

$5,490,000

Question 3

Estate must file form ___ if the gross value of the state plus historical taxable gifts exceeds what amount (2017)?

Answer 3

Form 706
FMV
$5,490,000

Question 4

Due date for Estate Tax form 706

Answer 4

9 months after decedent’s death

“Birth and Death =9 months”

Question 5

Gross estate value (two options)

Answer 5

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

Question 6

Gross Estate. If property owned jointly with a spouse, what amount is included in the gross estate?

Answer 6

50% FMV

Question 7

Estate Transfer Tax Calculation

Answer 7

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

Question 8

Medical and administrative expenses can be deducted where? (2 options)

Answer 8

Reduce gross estate OR

Individual’s final 1040

Question 9

Two unlimited estate deductions

Answer 9

• Charitable

- Marital transfers

Question 10

Estate tax due calculation

Answer 10

40% * [tentative tax base at death] - $5,490,000

Question 11

When gifts given exceed the $14,000 exclusion amount, what form is filed?

Answer 11

Form 709 Gift Tax

Question 12

Gift Tax. Annual exclusion amount is not available for what gifts?

Answer 12

FUTURE

Question 13

Gift-splitting amount?

Answer 13

28,000 (MFJ)

Question 14

Gift Tax. 4 Gifts that are Unlimited Exclusions

Answer 14

1) Payment DIRECTLY paid to educational institution
2) Payments DIRECTLY paid to health care provider
3) Charitable Gifts
4) Marital Gifts

Question 15

Gifts. Type of gifts that qualify for the annual exclusion and subject to the gift tax

Answer 15

COMPLETE gifts

Question 16

Gifts. Type of gifts that are included in the gross estate and not subject to the gift tax

Answer 16

INCOMPLETE gifts

Question 17

Gifts. Tax consequences to the recipient.

Answer 17

NONE - no income –> basis = NBV

Question 18

Calculation of Tax due on current gifts

Answer 18

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

Question 19

Designed to prevent an individual from escaping an entire generation of gift and estate tax.

Answer 19

Generation-Skipping Transfer Tax (GSTT)

Question 20

GSTT applies when individuals transfer property to a person who is ___ generations younger than the donor or transferor

Answer 20

TWO

Trustee or Transferor pays the GSTT

Question 21

GSTT exemption amount

Amount if MFJ (if split the GSTT)

Answer 21

5,490,000

MAX: 10,980,000
“split GSTT”