THE FEDERAL GIFT AND ESTATE TAXES
Under the Tax Relief Reconciliation Act of 2001, the exclusion amount for Federal estate
and gift tax purposes is to remain at $1 million from 2002 onward.
For Federal estate and gift tax purposes, the exemption equivalent is from the same as the
The use of the alternate valuation date (six months after the date of death) affects the
income tax basis of property that an heir receives from an estate.
The election of the alternate valuation date must decrease both the value of the gross
estate or the estate tax liability.
Bennett pays the surgeon and the hospital for his aunt’s gall bladder operation.
the aunt does not qualify as Bennett’s dependent, the transfer is not subject to the gift tax.
Gordan and Cristy are husband and wife and live in Arizona.
In 1987, they purchased a
commercial annuity for $300,000 using community funds.
Under the terms of the
contract, $2,250 a month is payable to them for Gordan's life.
If Gordan predeceases
Cristy, $1,900 a month is payable to Cristy.
Gordan dies in 2006 when the replacement
value of Cristy's annuity is $150,000.
As to the annuity, Gordan's estate includes:
None of the above.
Willie and Mercedes are husband and wife and have always lived in Pennsylvania, not a
community property state.
In 1980, using joint funds, they purchased an insurance
policy (maturity value of $600,000) on Mercedes’s life.
Their son, George, was
designated as the beneficiary.
In 2006, and at a time when the policy has a replacement
cost of $50,000, Mercedes dies.
As to the $600,000 insurance proceeds paid to George,
$300,000 is included in Mercedes’s gross estate, and Willie makes a gift of
$600,000 is included in Mercedes’s gross estate.
Willie makes a gift of $600,000.
$50,000 is included in Mercedes’s gross estate.