They entitle a surviving spouse to some portion of the decedents estate even

They entitle a surviving spouse to some portion of

This preview shows page 55 - 63 out of 103 pages.

They entitle a surviving spouse to some portion of the decedent’s estate, even though the decedent may have willed a smaller portion to this person. Chapter 22, Exhibit 20a Dower and Curtesy
Image of page 55
CCH Federal Taxation Comprehensive Topics 56 of 103 Dower and Curtesy Dower entitles a surviving wife to a portion of real property her husband owned and possessed during their marriage.   Curtesy entitles a surviving husband to a life estate in all of his wife’s land if they had children. Chapter 22, Exhibit 20b
Image of page 56
CCH Federal Taxation Comprehensive Topics 57 of 103 Dower and Curtesy Dowers and curtesies, although included in the gross estate of a decedent spouse, are “zeroed out” of the decedent spouse’s taxable estate by the marital deduction. Unless the property is “consumed” by the surviving spouse, it is included in the surviving spouse’s taxable estate at fair market value on the date of death (or the six-month alternative date.) Chapter 22, Exhibit 20c
Image of page 57
CCH Federal Taxation Comprehensive Topics 58 of 103 Valuing the Gross Estate Date of death. Value is the fair market value (FMV) of the property at date of death unless a special valuation rule is used. Real property is usually valued at its highest and best use. Chapter 22, Exhibit 21a
Image of page 58
CCH Federal Taxation Comprehensive Topics 59 of 103 Valuing the Gross Estate Alternative valuation date. The executor may elect to value the estate at an alternate valuation date, which is 6 months after the date of death. If the election is made and property is distributed before the 6-month date, then the value on the day after the date of distribution will apply. Thus, there are 3 possible dates for valuing an estate: Date of death, or, If elected by executor (not heir), the earlier of: (a) 6 months after date of death, or (b) Date received by heir if before 6 months. Chapter 22, Exhibit 21b
Image of page 59
CCH Federal Taxation Comprehensive Topics 60 of 103 Valuing the Gross Estate The alternative valuation date carries three requirements: It is irrevocable. It applies to all property of the estate (i.e., the executor cannot “pick and choose” which property to elect). It can be made only if it results in a reduction in BOTH the value of the GE and the sum of estate tax and the generation-skipping transfer tax. Chapter 22, Exhibit 21c
Image of page 60
CCH Federal Taxation Comprehensive Topics 61 of 103 Deductions from the Gross Estate Examples. Deductions are subtracted from the gross estate (GE) in computing the taxable estate (TE). Typical expenses include: funeral expenses, administrative expenses, debts of the decedent, claims against the estate, casualty losses and allocations of deductions on returns.   Funeral Expenses. Deductible from the GE, even if they if incurred in a foreign country, or if they go beyond the “necessary.” Chapter 22, Exhibit 22a
Image of page 61
CCH Federal Taxation Comprehensive Topics 62 of 103 Deductions from the Gross Estate Administrative Expenses. These include fees paid to the executor, lawyer, accountant, and appraiser. They are deductible if: Allowable by local law; and Necessary for administering the estate (i.e., for selling or
Image of page 62
Image of page 63

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture