Therefore, the distinction is that the subtraction at item 2 for gift tax is a "tentative tax" (before any offset for
unified credit), whereas item 2 of estate tax is the actual amount payable (after all
unified credits have been used).
It is unclear when, if or how Congress will act with regard to repeal of the estate and GST tax in 2010 and return to earlier tax rates,
unified credits, and exemptions in 2011.
The
unified credits and exemption equivalents are shown below under QUESTIONS AND ANSWERS.
While naming a trust as beneficiary provides for efficient use of a couple's
unified credits, it generally results in three income tax disadvantages.
The above charts demonstrate that either Jim's 401(k) or Sally's 403(b) must be used to shelter both
unified credits.
The marital and prorated
unified credits discussed above may also be used to minimize or eliminate the U.
A married couple could each establish GRATs and GRUTs (or split gifts--see Chapter 22) so as to utilize both spouse's
unified credits and marginal gift and estate tax brackets.
The above charts demonstrate that either Jim's 401k or Sally's 403b must be used to shelter both
unified credits.
However, gifts of life insurance or cash to purchase or maintain insurance can pass tax free through the next generation if the donors make the gifts utilizing their
unified credits (or make the gifts subject to gift tax if their
unified credits have been used up), and allocate some of their generation-skipping exemptions to the gifts.
The taxpayers also tendered as evidence a fax informing their accountant that they had funded SFLP II and requesting advice as to the percentage of partnership interests they should transfer to the children to maximize use of the gift tax annual exclusion and applicable
unified credits.
17) The donees must reflect the deemed gift of the lapsed withdrawal right on a gift tax return, reducing their
unified credits.
Taxpayers often sought to capitalize on their use of
unified credits, through varied means.
