TAX: Federal Estate Tax Flashcards
What is the formula to calculate the federal estate tax?
Gross Estate (investment, personal residence, personal use assets, everything owned!).
- Deductions
= Taxable Estate
+ Taxable Gifts Made of 1976
X United Tax Rates
= Tentative Transfer Tax
- Gift tax paid after 1976 (at current rates)
- Unified credit and other credits
= Estate Tax Due
Who can value the gross estate?
The executor of the estate or one appointed by the state
What is the alternative valuation date?
The FMV is measured at the date of death or the AVD which is 6 months after death. The only time you can make this election is if the value of the gross estate will be LESS than the date of death value
Basically it is inappropriate to value tax on a depreciating property of the value drops significantly.
The basis will be the AVD
What happens if you elect the AVD but don’t wait the full six months to distribute?
it would be the date of distribution
What is the right-of-survivorship?
At the date of death, the property who still owns the property will pass to the person still living (100% of the property). Unless it can be proven the surviving owner contributed to the purchase of the asset.
What is tenancy in common?
There is no right of survivorship.
The decedent’s share will pass into the probable estate and its distribution will be controlled by the decedent’s will.
Proceeds from life insurance are included in the gross estate under either two conditions:
1) The decedent had incidents of ownership (the right to designate the beneficiary) - you have to give up the rights in to policy or control over the policy
2) The decedent estate is the beneficiary of the insurance policy
The the owner has the property put it into an estate but the owner has the ability to revoke is included in the gross estate?
True, it is included in the gross estate..
Additionally enjoyment of income still belongs to the original owner.
