REG 5 - Estate and Gift Transactions Flashcards
What is the exclusion amount on gifts given that can be excluded up to?
$14,000 - Single
$28,000 - Married
What is the credit for lifetime gifts and death time transfers? Unified estate and gift tax credit
Estate and gift tax credit of $2,141,800 effectively exempts from estate/gift tax the first $5,490,000 of taxable cumulative gifts and death time transfers
Is the value of property transferred for estate taxed at FMV or NBV?
FMV
What is the FMV of gross estate?
FMV at date of death OR alternate valuation date
What is the alternate valuation date?
The FMV of property at the earlier of the date the property is distributed
OR
Six months after the date of death
What is the basis of property if alternate valuation date is elected, and property is sold before 6 months?
Basis is the sales price
What are discretionary deductions to an estate?
1) Unlimited charitable deductions
2) Unlimited Marital deductions to surviving spouse
Explain the applicable exclusion amount for surviving spouse?
If the spouse who dies first does not use ALL of their unified credit, the surviving spouse can use it (add to their credit)
Is gift tax paid by person giving gift or receiving gift?
GIVING GIFT
What four types gifts made are unlimited exclusions?
1) Payments made DIRECTLY to an education institution
2) Payments made DIRECTLY to a healthcare provider for medical car
3) Charitable gifts
4) Marital gifts
What are two qualities needed to be excluded from gift tax?
Gifts MUST be present & complete
Do present interest gifts qualify for the annual exclusion? What are present interest gifts?
Present interest gifts QUALIFY for annual exclusion:
1) Outright gifts of cash or property
2) Trust income where distributions are MANDATORY
3) Life estates
4) Estates for a term
5) Bonds or notes
6) Unrestricted transfers of life insurance policies
Do future interest gifts qualify for the annual exclusion? What are future interest gifts?
Future interest gifts DO NOT qualify for annual exclusion:
1) Reversions (giving asset and later getting back)
2) Remainders (distributing at future time)
3) Trust income interest where accumulation of income
4) Present interest WITHOUT ascertainable value
Do complete gifts qualify for the annual exclusion? What are complete gifts?
Complete gifts qualify for annual exclusion:
A gift is considered complete if:
1) even though the donee is not yet born, provided his or her identity can be later ascertained
2) Despite the possibility that the property may revert to the donor at some future time
Do incomplete gifts qualify for the annual exclusion? What are incomplete gifts?
Incomplete gifts do NOT qualify for annual exclusion:
A gift is considered incomplete (and subject to gift tax) if it is conditional and revocable
Conditional: Subject to conditions (recipient will get gift once they graduate)
Revocable: The donor reserves the right to revoke the gift or change beneficiaries.
