Inheritance and
Gift Tax
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Estate, Gift
& Inheritance Taxes
Death tax. Estate tax. Inheritance tax, people refer to it by
many names.
Estate & Inheritance Tax
The money and property you own when you die (your estate) may be subject to federal estate tax and the gross income of your estate may be subject to federal income tax.
Inheritance tax, estate tax and death duty are the names given to various taxes which arise on the death of an individual. It is a tax on the estate, or total value of the money and property, of a person who has died.
Typically an estate tax taxes the personal representatives of the deceased, while an inheritance tax taxes the beneficiaries of the estate..
Gift Tax
If you give someone money or property during your life, you may be subject to federal gift tax.
Gifts you make during your life from your estate can also be subject to the generation-skipping transfer (GST) tax, if the gifts or bequests are to a person, such as a grandchild, who is more than one generation younger than you.
Most gifts are not subject to the gift tax and most estates are not subject to the estate tax.
- There is usually no tax if you make a gift to your spouse or to a charity or if your estate goes to your spouse or to a charity at your death.
- If you make a gift to someone else, the gift tax usually does not apply until the value of the gifts you give that person exceeds the annual exclusion for the year.
To
determine
if
the
sale
of
inherited
property
is
taxable,
you
must
first
determine
your
basis
in
the
property.
The
basis
of
inherited
property
is
generally
one
of
the
following:
-
The
fair
market
value
(FMV)
of
the
property
on
the
date
of
the
decedent's
death.
-
The FMV of the property on the alternate valuation date if the executor of the estate chooses to use alternate valuation.
If
you
sell
the
property
for
more
than
your
basis,
you
have
a
taxable
gain.
Inheritance
tax
is
not
all
together
the
same
as
estate
tax,
though
they
do
share
some
similarities
and
follow
some
comparable
procedures.
Inheritances
are
subject
to
some
tax
exemptions.
And
though
inheritance
tax
rates
can
be
high,
they
work
in
different
ways
depending
on
the
inheritance
and
the
state
you
live
in.
References:
Publication
950
(9/2010),
Introduction
to
Estate
and
Gift
Taxes
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