Gift Tax Essay
Exam 2 : Estate & Gift Tax
1.) Determination of an estate tax by applying the steps involved in determining the estate tax and showing all work
2.) Determination of gift tax owed by applying the steps in determining a gift tax and showing all work
3.) Credit on prior transfers
* A credit is allowed against the estate tax for all or a part of the estate tax paid with respect to the transfer of property to the present decedent by or from a person who died within 10 years before, or within 2 years after the decedent * The purpose of this credit is to prevent successive taxes on the same property within a brief period. * If the transferee was the transferors surviving spouse, no credit is allowed with respect to property …show more content…
397)
A Crummey trust is a trust for the benefit of a minor into which gifts are made in a manner qualifying them for exclusion from the unified gift and estate tax.
Normally, gifts to minors are subject to parental / guardian control until the age of majority. In order to delay the transfer of control beyond the age of 18, the funds must be placed in trust. However, the annual gift exclusion ($13,000 per individual and $26,000 per married couple as of 2011) from the gift tax is only available for gifts of so-called current interests. Normally, a gift into a trust that comes under control of the beneficiary at a future date does not constitute a current interest.
A Crummey trust achieves the desired treatment by offering the recipient a window of time (often 30 days) to take immediate control of the gift. (The control offered only applies to the current gift--by assumption, an amount no greater than the annual exclusion amount--not the entire trust.) If the recipient fails to do so during that window, the gift becomes part of the trust, and is subject to the trust's distribution conditions. However, since the recipient had the opportunity to receive the funds outside of the trust, the gift is deemed to be a current interest, subjecting it to the annual
1.) Determination of an estate tax by applying the steps involved in determining the estate tax and showing all work
2.) Determination of gift tax owed by applying the steps in determining a gift tax and showing all work
3.) Credit on prior transfers
* A credit is allowed against the estate tax for all or a part of the estate tax paid with respect to the transfer of property to the present decedent by or from a person who died within 10 years before, or within 2 years after the decedent * The purpose of this credit is to prevent successive taxes on the same property within a brief period. * If the transferee was the transferors surviving spouse, no credit is allowed with respect to property …show more content…
397)
A Crummey trust is a trust for the benefit of a minor into which gifts are made in a manner qualifying them for exclusion from the unified gift and estate tax.
Normally, gifts to minors are subject to parental / guardian control until the age of majority. In order to delay the transfer of control beyond the age of 18, the funds must be placed in trust. However, the annual gift exclusion ($13,000 per individual and $26,000 per married couple as of 2011) from the gift tax is only available for gifts of so-called current interests. Normally, a gift into a trust that comes under control of the beneficiary at a future date does not constitute a current interest.
A Crummey trust achieves the desired treatment by offering the recipient a window of time (often 30 days) to take immediate control of the gift. (The control offered only applies to the current gift--by assumption, an amount no greater than the annual exclusion amount--not the entire trust.) If the recipient fails to do so during that window, the gift becomes part of the trust, and is subject to the trust's distribution conditions. However, since the recipient had the opportunity to receive the funds outside of the trust, the gift is deemed to be a current interest, subjecting it to the annual