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REG 45-Federal Estate Tax
Terms in this set (14)
Types of taxes on estates?
Estate tax (on death of decedent)
Estate income tax (filed every year)
When are estate taxes due?
9 months after death
Estate tax computation?
+taxable gifts made during life
Total taxable transfers
X unified tax rates
=Tentative transfer tax
-Gift tax paid during life
-Unified credit and other credits
=Estate tax due
FMV of all property at date of death/alternate valuation date or special use value
Special use valuation?
For farms or closely held businesses that continues to be used for 5 years after death
Valuation can be discounted 1.5M
Valuation if AVD is selected and the distribution date happens between date of death and AVD?
FMV as of distribution date
Tenancy by the entirety?
50% of estate goes to estate of first spouse to die
There is right of survivorship:
Property that is jointly owned outside of married relationship: property legally goes to person that is living but is 100% taxed to the person that died unless the living partner can prove that they contributed to the purchase of the estate
Tenancy in common?
No right of survivorship:
Property that is jointly owned outside of marriage: property goes to probate estate and is distributed according to will and so estate is taxed on portion remaining in the estate
Treatment for life insurance proceeds?
If estate is beneficiary or there are incidents of ownership of the policy (any rights attached to the estate) it is included
Buy-sell agreements for life insurance proceeds are not included
Treatment for retained interests in property?
They are included in the estate; especially if passed 3 years before death
Deductions allowed against an estate?
Admin expenses and funeral costs (only on either estate tax return or income tax return)
Will offset a net estate of $5,430,000
Unused credit can be added to and used by surviving spouse estate
What is generation skipping tax?
Additional estate tax charged to estate skipping a generation to ensure that it is taxed twice; tax rates and unified credit apply exactly the same way
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