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Regulation - Estate
Estate & Trust
| Question | Answer |
|---|---|
| Unified transfer tax system | Gift(while alive), Estate(upon death), GST; same tax rates, exclusions and credit |
| Gift Tax Formula | GI-50%spouse-(13K)-tuition&medical(unlim.)-Charitable(unlim.)-Marital deduction(unlim.) + PYtaxable gifts=total*tax-PYtaxable-credit(345K)=GiftTaxLiab. |
| Future vs. Present Interest | Only gifts of PRESENT interest are excludable (immediate use, possession or enjoyment). FUTURE interest (reversions, reminders, future benefit) not deductible. |
| Sec.2503(c )trust | minors<21, allows parents annual exclusion(13K)b4age21, to qualify may pay income, must pass to beneficiary when age 21 |
| Crummey trust | more flex than 2503(c ), beneficiary can be any age, terminate anytime. To cal - beneficiary must have power to demand disturb of <13K, or annual pro-rata |
| Educational/Medical/Political/Charitable exclusion | unlimited |
| Estate Tax | must file if exceeds 3.5M, basis is FMV at death or alt value date(6mos), |
| Estate Tax Formula | Gross Estate at FMV - funeral exp. - admin exp. - debts&mrtgs-charit.contrib(unlit.)-marital deed. (unlit.) + gifts = transfer tax - tax credit (1.4558M)=tax liab. |
| Estate&Trust filings | Estate - 9mos after death or calendar(gift tax also), Form 709, income >$600, AMT exemption is $22.5K, must make est. pmnts (not gift return). Gifts to unrelated beneficiaries in excess of 13K must file Form 1041. |
| Simple Trust | all income is distributed, no charitable contr., no corpus distrib., income taxable to beneficiaries (not trust) even if no distribution in CY, multiple beneficiaries prorate DNI retains char. |
| Complex Trust | trustee may pay or accumulate income, allows charit. contrib., allows corpus disturb Taxed 2-tier 1)required distributions even out of corpus 2)all other (corpus disturbs. not taxable) |
| Estate or Trust exemptions | estate $600, Simple Trust $300, Complex trust $100 |
| Non Deductible Expenses of estate&trust | expenses of tax exempt income, medical/funeral expenses (deducted on final 1040), no NOL carryovers from 1040final |
| DNI | same as estate trust formula, but +personal exemption+capital loss deduction (lim.3K)+tax exempt int. - net CG allocable to corpus - extraordinary div. & taxable stock divs allocable to simple trust corpus |
| Grantor Trust | grantor retains control and pays tax on income, revocable, must own >5% |
| Tax Positions - reasonable standard, realistic possibility, substantial authority, MLTN | reasonable stnd (success>20%), realistic (success>30%), substantial authority (success>40%), MLTN >50% |
| Preparer Responsibility | estimates OK, in good faith - not verify OK, reasonable basis unless tax shelter, sign, provide copy to TP, records 3yrs maint., no disclosure without subpoena |
Created by:
baurjan
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