R4 Estate (T)

Question 1

Annual Estate Income Tax (Form 1041)

Answer 1

Required when annual income exceeds $600
May elect to have calendar year or fiscal year-end
An estate is exempt from making estimated payments for its first two tax years

Question 2

Annual Trust Income Tax Return (Form 1041)

Answer 2

Must use calendar year-end

May deduct amounts distributed to beneficiaries up to DNI (less adjusted tax-exempt interest)

Question 3

The Estate Tax (Form 706)

Answer 3

A tax imposed on the value of property transferred by the decedent at death
Must file if gross value of estate plus historical taxable gifts by the decedent exceed $5,340,000 in 2014
Must be filed within 9 months of decedent’s death

Question 4

Gross Estate (FIGAR)

Answer 4

FMV of property owned
Insurance proceeds
Gifts - Incomplete 
All property to be received
Revocable transfers

Question 5

FMV of Property Owned in Gross Estate

Answer 5

Spouse Joint - 50/50
Other Joint - 100% less other owner’s contribution
Date of Death; or
Alternative Valuation Date (only if decreases both estate value and tax) is the earlier of the date the property is distributed to the heirs or six months after the date of death

Question 6

Estate Deductions

Answer 6

Discretionary Expenses

Non-discretionary expenses

Question 7

Non-Discretionary Expenses (MAD FAT)

Answer 7

Medical Expenses
Administrative Expenses
Debt of Decedent - Oustanding
Funeral Costs
Against the Estate - Claims
Taxes - Certain

Question 8

Medical Expenses for Estate Tax

Answer 8

Medical expenses paid out of the estate may be deducted on the income tax return of the decedent (Form 1040), subject to the 10% limitation provided
The expenses are paid within one year of death
They are not deducted on Form 706
The executor files an appropriate waiver

Question 9

Administrative Expenses for Estate Tax

Answer 9

An estate is allowed to deduct expenses of administering and settling the estate on Form 706

Question 10

Discretionary Expenses (CTST)

Answer 10

Unlimited Charitable Deduction
Unlimited transfers to charitable, scientific, educational, and religious institutions
Unlimited Marital Deduction
Unlimited transfers to the decedent’s spouse

Question 11

Unified Estate and Gift Credit

Answer 11

The IRC provides for a “Unified Estate and Gift Tax Credit” of $2,081,800 for year 2014. The tax credit is equal to the tax, on $5,340,000 tentative tax base at death

Question 12

Deceased Spouse Unused Exclusion

Answer 12

For decedent’s dying in 2014, the estate of a surviving spouse may be able to use, in addition to the $2,081,800 unified estate and gift tax credit, an additional credit based upon the unused exclusion amount of the surviving spouse’s predeceased spouse. It is generally the predeceased spouse’s applicable exclusion amount minus the portion of that exclusion amount that the predeceased spouse’s estate used to offset estate tax otherwise due