What is Estate Tax?
Definition of Estate TaxThe IRS defines the Estate Tax as "a tax on your right to transfer property at time of the taxpayer's death". The Estate would consist of an accounting of everything the taxpayer owned or had certain interests in at the date of death (Refer to Form 706). The fair market value of these items is used for calculation purpose and not the basis (not necessarily what you paid for them or what their values were when you acquired them). The total of all of these items is your "Gross Estate."
What is includable in the Estate?
The includible property consists of Cash and Securities, Real Estate, Insurance, Trusts, Annuities, Business interests and other assets.
What are the allowable deductions to arrive at Taxable Estate?
Once you have accounted for the Gross Estate, certain deductions are allowed in arriving at your "Taxable Estate." These deductions may include Mortgages and other Debts, Estate Administration expenses, property that passes to Surviving Spouses and Qualified Charities. The value of some operating business interests or farms may be reduced for estates that qualify.
The IRS has determined that in its current form, "the estate tax only affects the wealthiest 2% of all Americans".
Last edited by TaxGuru : 08-27-2007 at 10:11 PM.