[jeff]

REG Resources:

Free REG Notes & Audio – https://www.another71.com/cpa-exam-study-plan

REG 10 Point Combo: https://www.another71.com/products-page/ten-point-combo

REG Score Release: https://www.another71.com/cpa-exam-scores-results-release

[Heidi-O]

@Imendez2 Gifts and Estates follow the same rules. You may give a gift for $5,250,000 to someone and NOT pay any taxes on it. That is the tax deduction of 2,045,800. So if you give a gift to LSNYC for her exam stress of 5,250,000 – you would not have to pay taxes on it, because you get a 2,045,800 gift tax exemption. Now, if you pay her 5,250,001 – you have to pay tax on that $1 extra. This is a Lifetime Credit that is cumulative over your life.

Now, the person who Receives the gift – does not pay taxes!! That's why it's a gift to them!

There is an exception to paying gift taxes, and that is a gift that is under $14,000 a year (for 2013) – no need to file a gift tax return for that.

Medical Expenses paid directly to a hospital or physician for someone's care – unlimited amount on that

Education Expenses paid directly to the University or College – for tuition. Not certain if that one covers books or not. But it is unlimited also.

I hope it helps, if anyone else has anything that I missed or to add? 🙂

FAR Aug 2012 79
AUD Oct 2012 84
REG Aug 2013 87
BEC Jan 2013 80

[Anonymous]

Question on gifts: In Becker R4 Sim 3 the facts state that the donor has already used up her lifetime exclusion. She then gives more gifts. Why are the gifts still allowed the $13,000 “freebie” each (using 2012 numbers) if the exclusion has been used up?

[Anonymous]

Question on gifts: In Becker R4 Sim 3 the facts state that the donor has already used up her lifetime exclusion. She then gives more gifts. Why are the gifts still allowed the $13,000 “freebie” each (using 2012 numbers) if the exclusion has been used up?

[lbi18]

Let me see if I got this concept of the unified credit. Of course, I think I saw maybe 1 or 2 questions related to it in Becker and Wiley combined, but you never know what will pop up on the exam.

Effectively, every person is given a lifetime exclusion amount of $5,250,000. Let's say I make lifetime taxable gifts of $2,000,000. However, since I haven't used up my exclusion amount, these are tax-free to me. My remaining exclusion is $5,250,000 – $2,000,000 = $3,250,000.

Now, let's say I die with this remaining exclusion of $3,250,000. This would mean that instead of the first $5,250,000 that is exempt from estate tax, it is now the first $3,250,000 that is exempt from estate tax.

Is this correct? It seems to make sense in my head.

FAR - 85
AUD - 99
REG - 85
BEC - 10/4/13 (Waiting)

Using Becker Self-Study

[lbi18]

Let me see if I got this concept of the unified credit. Of course, I think I saw maybe 1 or 2 questions related to it in Becker and Wiley combined, but you never know what will pop up on the exam.

Effectively, every person is given a lifetime exclusion amount of $5,250,000. Let's say I make lifetime taxable gifts of $2,000,000. However, since I haven't used up my exclusion amount, these are tax-free to me. My remaining exclusion is $5,250,000 – $2,000,000 = $3,250,000.

Now, let's say I die with this remaining exclusion of $3,250,000. This would mean that instead of the first $5,250,000 that is exempt from estate tax, it is now the first $3,250,000 that is exempt from estate tax.

Is this correct? It seems to make sense in my head.

FAR - 85
AUD - 99
REG - 85
BEC - 10/4/13 (Waiting)

Using Becker Self-Study

[lmendez2]

Ok I think i am getting a better grasp on this let me see if I understand how to calculate the estate transfer tax calculation:

I have a estate worth $8 million and non discretionary expenses of $100,000 and combined discretionary of $500,000 my estate transfer tax will be

8,000,000

– 100,000

= 8,900,000

– 500,000

= 8,400,000

x 40% (tax rate for 2013)

= 3,360,000

– 2,045,800 (credit for 2013)

= 1,314,200

is this correct? what about the tax due on current gifts? what if I gave out a total of $500,000 this year consisting of:

John $16,000

Mary $20,000

Directly to a school for a friend's tuition $40,000

Directly to a health care provider for dad surgery $224,000

Gift to my spouse $200,000

My current tax on gifts is

500,000 (gross gifts this calendar year)

– 28,000 (exclusion of $14,000 per donee)

– 464,000 (unlimited marital deduction, and payments to school and health care provider)

= 8,000 (taxable gifts this year)

+ 280,000 (taxable gifts from prior years)

= 288,000 so this is not yet taxable because I am not over my $5,250,000 life time limit right?

Tax due on current gifts is $0.00

I hope this is not too much and if someone can please give me any input I really appreciate it!

lbi8 – I believe you are correct whatever is left from your lifetime credit is passed to the estate once you die and they can use it to exclude it from their estate, also a surviving spouse may be able to use whatever is left from the deceased spouse and combine it with their total lifetime credit left

Heidi-O – thank you for clarifying the gift and estate tax it is making a little more sense now I am just afraid I will get a big simulation in it and not know what to do at least I want to have a decent understanding and make some educated guesses if possible haha!

FAR 5/29/13 75
REG 7/27/13 84
BEC 08/31/13 84
AUD 11/02/13 89

[lmendez2]

Ok I think i am getting a better grasp on this let me see if I understand how to calculate the estate transfer tax calculation:

I have a estate worth $8 million and non discretionary expenses of $100,000 and combined discretionary of $500,000 my estate transfer tax will be

8,000,000

– 100,000

= 8,900,000

– 500,000

= 8,400,000

x 40% (tax rate for 2013)

= 3,360,000

– 2,045,800 (credit for 2013)

= 1,314,200

is this correct? what about the tax due on current gifts? what if I gave out a total of $500,000 this year consisting of:

John $16,000

Mary $20,000

Directly to a school for a friend's tuition $40,000

Directly to a health care provider for dad surgery $224,000

Gift to my spouse $200,000

My current tax on gifts is

500,000 (gross gifts this calendar year)

– 28,000 (exclusion of $14,000 per donee)

– 464,000 (unlimited marital deduction, and payments to school and health care provider)

= 8,000 (taxable gifts this year)

+ 280,000 (taxable gifts from prior years)

= 288,000 so this is not yet taxable because I am not over my $5,250,000 life time limit right?

Tax due on current gifts is $0.00

I hope this is not too much and if someone can please give me any input I really appreciate it!

lbi8 – I believe you are correct whatever is left from your lifetime credit is passed to the estate once you die and they can use it to exclude it from their estate, also a surviving spouse may be able to use whatever is left from the deceased spouse and combine it with their total lifetime credit left

Heidi-O – thank you for clarifying the gift and estate tax it is making a little more sense now I am just afraid I will get a big simulation in it and not know what to do at least I want to have a decent understanding and make some educated guesses if possible haha!

FAR 5/29/13 75
REG 7/27/13 84
BEC 08/31/13 84
AUD 11/02/13 89

[lbi18]

Imendez, sounds about right!

I'm just confused on one part in the beginning. How did you get to $8,900,000? Wouldn't the net estate be $7,400,000 instead? That would be your $8 million gross MINUS $600,000 (combined nondiscretionary and discretionary expenses).

FAR - 85
AUD - 99
REG - 85
BEC - 10/4/13 (Waiting)

Using Becker Self-Study

[lbi18]

Imendez, sounds about right!

I'm just confused on one part in the beginning. How did you get to $8,900,000? Wouldn't the net estate be $7,400,000 instead? That would be your $8 million gross MINUS $600,000 (combined nondiscretionary and discretionary expenses).

FAR - 85
AUD - 99
REG - 85
BEC - 10/4/13 (Waiting)

Using Becker Self-Study

[lbi18]

Imendez, sounds about right!

I'm just confused on one part in the beginning. How did you get to $8,900,000? Wouldn't the net estate be $7,400,000 instead? That would be your $8 million gross MINUS $600,000 (combined nondiscretionary and discretionary expenses).

FAR - 85
AUD - 99
REG - 85
BEC - 10/4/13 (Waiting)

Using Becker Self-Study

[lbi18]

Imendez, sounds about right!

I'm just confused on one part in the beginning. How did you get to $8,900,000? Wouldn't the net estate be $7,400,000 instead? That would be your $8 million gross MINUS $600,000 (combined nondiscretionary and discretionary expenses).

FAR - 85
AUD - 99
REG - 85
BEC - 10/4/13 (Waiting)

Using Becker Self-Study

[lmendez2]

@ Ibi18 – yes you are correct I am sorry I was so focused on understanding the concept that I made a math error hopefully that doesn't happen during the test!

I have a estate worth $8 million and non discretionary expenses of $100,000 and combined discretionary of $500,000 my estate transfer tax will be

8,000,000

– 100,000

= 7,900,000

– 500,000

= 7,400,000

x 40% (tax rate for 2013)

= 2,960,000

– 2,045,800 (credit for 2013)

= 914,200

much better!

FAR 5/29/13 75
REG 7/27/13 84
BEC 08/31/13 84
AUD 11/02/13 89

[lmendez2]

@ Ibi18 – yes you are correct I am sorry I was so focused on understanding the concept that I made a math error hopefully that doesn't happen during the test!

I have a estate worth $8 million and non discretionary expenses of $100,000 and combined discretionary of $500,000 my estate transfer tax will be

8,000,000

– 100,000

= 7,900,000

– 500,000

= 7,400,000

x 40% (tax rate for 2013)

= 2,960,000

– 2,045,800 (credit for 2013)

= 914,200

much better!

FAR 5/29/13 75
REG 7/27/13 84
BEC 08/31/13 84
AUD 11/02/13 89

[lmendez2]

Does anyone feel like there is no way you can fail the test not because you are super prepared but just because you never ever ever want to study for REG again? that is how I am feeling I CANNOT FAIL! I need to pass this because I hate it so much and is making my life miserable haha

Just wanted to vent my test is this Saturday and I really need to pass so I never have to study for this again.

FAR 5/29/13 75
REG 7/27/13 84
BEC 08/31/13 84
AUD 11/02/13 89

[lmendez2]

Does anyone feel like there is no way you can fail the test not because you are super prepared but just because you never ever ever want to study for REG again? that is how I am feeling I CANNOT FAIL! I need to pass this because I hate it so much and is making my life miserable haha

Just wanted to vent my test is this Saturday and I really need to pass so I never have to study for this again.

FAR 5/29/13 75
REG 7/27/13 84
BEC 08/31/13 84
AUD 11/02/13 89

[Author]

Replies