Federal Estate Gift Tax

Federal Estate Gift Tax - Federal Estate Gift Tax The...

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Federal Estate Gift Tax The purpose of gift tax is to capture assets transferred that would otherwise escape estate tax. Gift Tax is a voluntary transfer, for less than full and adequate consideration, of property from one person donor to another donee. Requirements: The donor must: - have made a transfer - be competent to make the gift - be capable of receiving the gift - take delivery of the gift - actually part with the dominion and control over the gifted property (complete vs incomplete) Complete vs. Incomplete Gifts Incomplete : when the donor reserves the power to revest the beneficial title to the property in himself or as not released all control over the asset. - Transfers to a revocable trust or with revocable beneficiary designations - Creation of joint accounts – complete when noncontributing party makes withdrawal - Transfer with retained general power of appointment (adverse interest rules apply here too) Complete : 25.251102 (b) Determining the Gift - Section 2501 : A tax, computed as provided in section 2502 , is hereby imposed for each calendar year on the transfer of property by gift during such calendar year by any individual, resident or nonresident. - Section 2511 : Subject to the limitations contained in this chapter, the tax imposed by section 2501 shall apply whether the transfer is in trust or otherwise, whether the gift is direct or indirect, and whether the property is real or personal, tangible or intangible. Direct V Indirect Direct : direct transfer of cash or property from the Donor to the Donee Indirect : Transfers on behalf of a Donor for the benefit of the Donee Donative Intent : - Donative intent/motive by the transferor is not an essential element in the application of GT Determining the Gift - Did the donor receive full and adequate consideration for the transferred property? IF YES, NO G. IF NO, POSSIBLE G.
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