[Soproudofmyself]

Ok…so this might be an easy concept to some of you guys but I’m lost. lol

So…the “unified estate and gift tax credit” is a combined credit for federal gift tax and estate tax.

Gifts of $13,000 or less per year/per person are excluded from tax. In my study materials gift tax rules mention a $1,000,000 lifetime credit and they also mention something about $345,800?

How does the $1,000,000 lifetime credit work? Does that mean I can avoid tax on gifts if I make them under $13,000 per individual thoughout my lifetime but only up to $1,000,000. So if I were rich, I can give 76 people $13,000 thoughout my lifetime and not pay taxes on that?

What is the $345,800 about?

Ok, so now what’s the unified thing about?

They are combining estate and gift tax credit…so the $1,000,000 mentioned above includes estate transfers as well?

But there is reference to $5,000,000 for estates?

Help! =)

I wish I had someone to study with…

[Anonymous]

Another quick question:

Here's a Wiley question from 2011 test bank:

Smith and Jones, both US citizens, died in 2009. Neither made any lifetime taxable gifts. At the dates of death, Smith's gross estate was $2,800,000, and Jones' gross estate was $4,300,000. A federal estate tax return must be filed for…

Answer based on Wiley's test bank: Must be filed for Jones. However, didn't the rules change sometimes in June 2011? Are husband and wife able to offset each other exemption amount? Since Smith still had $2,200,000 until $5M, Jones can use that excess to be exempt from filing 709?

I swear that I read it somewhere, but can't find it…I hope I'm not dreaming about it lol jk.

[Minimorty]

@cpa628 – first, assume smith and jones are unrelated parties. It says nothing about husband and wife and they have different last names. Second, the exemption in 2009 was $3.5 million. There was no estate tax in 2010, but they changed the law in December 2010. 2010 estate tax laws are a little complicated in that you could elect one of 2 different sets of rules (the 2010 rules or the 2011 rules).What you are referring to is for 2011 and 2012 and is called portability. The exemption amount for first spouse is $5 million and any unused portion may be used by the second spouse upon their death.

[Anonymous]

Perfect!! Thanks!!!

[Author]

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