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16 Cards in this Set
- Front
- Back
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Estate has 2 types of taxes
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-Income tax- income earned when estate is in existence
-Estate tax- is a transfer tax based on the value of the estate |
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Income distribution deduction
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is the lesser of
-actual distribution to beneficiary OR -DNI ( less tax exempt income) |
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Annual ESTATE income tax return (1041)
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- required to file return if income exceeds 600$
-can have calender or fiscal year beginning on the date of the death of the decadent -is exempted from making estimated payments for first 2 years -no standard deduction allowed. |
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Annual TRUST income tax return (1041)
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- calender year only
-may deduct amounts distributed to beneficiaries upto DNI |
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Simple Trust
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-only makes distributions out of current income
-CANNOT make distributions from corpus -has to distribute all of its income -cannot take a deduction for charitable contribution -300$ exemption at arriving at its taxable income |
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Complex Trust
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- may accumulate current income
-may distribute principal -may deduct charitable contribution -exemption of 100$ in arriving at its taxable income |
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GR Estate tax
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Everything in the estate is taxable before it moves to somebody else at FMV
-form 706 - filed within 9 mnths after the decadent dies -first 100,000 exempt -no tax for 2010 |
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Gross estate
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-FMV property
-insurance proceeds -incomplete gifts -revocable transfers -income in respect of decadent |
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Non-Discretionary deductions
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- Medical expenses subject to 7.5% limitation
- Admin expenses The above can be taken either in income tax OR estate tax not both. -outstanding debts of decadent -claims against estate -funeral costs -certain taxes |
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Discretionary deductions
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Religious or charitable bequests
transfers to spouse |
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Gift tax (form 709)
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paid by person giving the gift
- per person per Year to anyone -exclude first 13000 or 26000 if made jointly -should be filed by April 15th |
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Gift tax -unlimited exclusion for
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-payments made directly to educational institution
-payments made to health care provider for medical care -charitable gifts -marital deduction |
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Campaign expenses paid to a political party- Gift ?
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NO-business deduction
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Trusts and estates are often called
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fiduciaries
also called conduits as the distributions to beneficiaries are deductible & not taxable at both ends. |
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For 2010 only
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Estate and gift taxes are combined
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a)Gift tax exemption
b)applicable credit for lifetime gifts c)Transfer (lifetime) |
a)13000$/year/person
b)345800$ c) first 100,000 |
