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1Estate, Gift and Generation-Skipping Transfer Taxes OverviewTAX 6405
Class ScheduleUnified Credit Transfer Tax OverviewOverview of Estate TaxOverview of Gift TaxOverview of Generation Skipping Transfer Tax (“GSTT”)2
3Estate and Gift Taxation in General
4Overview of Transfer TaxesAll gratuitous transfersare (currently) subject to a unified transfer tax(since 1976) including:the estate tax (has been in existence since 1916)the gift tax (has been in existence since 1932)the generation-skipping transfer tax (GSTT) (has been in existence since 1976)Note: Transfer taxes have a limited impact – have produced about 1% of total revenue & affected around 1% of individuals. Gift taxtax on inter vivos (lifetime) transfers for less than full and adequate considerationpayable by the donorEstate taxtax on testamentary (at death) transfersimposed on decedent’s estate determined under tax rules (this is NOT synonymous with the probate estate).tax on the right to pass property at death (this is a TRANSACTION tax, not a property tax)essentially, the individual’s final taxable giftGeneration Skipping Transfer Tax: Included in both Gift and Estate Tax.
5Overview of Transfer Taxes, cont’d
7Gift Taxes FormulaFormula For Gift & Estate Taxes:The 2009 Gift Tax Credit is $345,800 ($1 million of taxable gifts)The 2009 Estate Tax Credit is $1,455,800 ($3.5 million taxable estate)Gift tax Estate tax Total gifts to which the gift tax might apply (at fair value) – Education and medical exclusion – Political Gifts – Charitable deduction – Marital deduction – Annual exclusion(s) ($12,000 per donee) = Taxable gifts for the current period + All taxable gifts made in prior periods= Total taxable gifts to date