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Estate and Gift Tax
University of Kansas School of Law
Dickinson, Martin B.

1) Determination of the Gift Tax Due
a) All transfers “for less than adequate consideration in money of money’s worth”
i) §2511(a)- the scope of the tax
ii) 25.2511-1(g)(1), -1(h)(1)-(3)
iii) §2512(a)- if the gift is made in property the value of the gift shall be considered the amount of the gift
iv) 25.2512-8
v) Consideration
(1) 2043(b)- The relinquishment of marital rights are not treated as consideration
(2) 2501(a)(4)- a transfer of money or property to a political organization is not taxed under 2502
(3) 2502(c)- the tax shall be paid by the donor
(4) 2512(b)- Gift is measured by the difference between the value that was transferred and the consideration given
(5) 2516- if a written divorce agreement within 3 years beginning on the date 1 year before such agreement is entered into for either a property settlement or domestic support shall be deemed to be for full and adequate consideration
vi) Timing of the gift: in general
(1) 2036(a)- The value of property shall be included in the estate if the decedent retained for his life or for any period not ascertainable without reference to his death, or that does not in fact end before his death
(a) Possession or enjoyment of or the right to income from the property; OR
(b) The right, either alone or in conjunction with any other person to designate the persons who shall possess or enjoy the property or income therefrom
(2) 2038(a)(1)- The value of the gross estate shall include the value of all property to the extent of any interest therein of which the decedent has at any time made a transfer where the enjoyment was subject at the date of his death to any change through the exercise of power by the decedent alone or in conjunction with another person to alter, revoke, or terminate, or where such power is relinquished during the 3 year period
(3) 2503(a)
(a) Taxable gift means the total amount of gifts made during the calendar year, less deductions
(4) 25.2511-2, -1(h)(1)-(5)
vii) Disclaimers
(1) 2518- if a person makes a qualified disclaimer it is as if the transfer to the person never happen
(a) Qualified Disclaimer Defined- a irrevocable and unqualified refusal by a person – in writing, the writing is received by the transferor not later then 9 months after
(i) The date on which the transfer is made
(ii) The date the person reaches 21
(b) Such person has not accepted the interest or its benefits and the interests passes without any direction on the part of the person making the disclaimer
(2) 25.2518-1(b), -2(d)(1)
b) Less exclusions
(1) Lapses of general powers are treated are transfers only in excess of the greater of $5,000 or 5% of the assets out of which an exercise could be satisfied
(a) §2514(b)- the exercise or release of power of a general appointment shall be deemed a transfer of property by the person with the power
(i) (e) The lapse of the power of appointment shall be considered a release to the extent that the property exceeds the greater of $5,000 or 5% of the aggregated value of the assets
(2) Gifts to persons other than the donor’s spouse are reduced by 50% per §2513 if gift-splitting elected
(a) §2513
(b) 25.2513-2(a)(1)
(3) Tuition and medical expense exclusions
(a) §2503(e)- A qualified transfer shall not be treated as a transfer of property. A qualified transfer is amount paid on behalf of an individual as tuition to an educational organization or to a person who provides medical care
(b) 25.2503-6
(c) 6019(a)(1)- Any individual who makes a gift other than a transfer under §2503(b) or (e), 2523, 2522 shall make a return with respect to the gift tax
(4) Annual per donee exclusions
(a) §2503(a)&(b)- $13,000
c) Gross Gifts
(1) Less deductions
(a) Marital deduction
(i) §2523(a)- the amount transferred to a current spouse is deductable
(ii) 2523(i)(1)-(2)- if the spouse of the donor is not a US citizen no deduction will be allowed under 2523 and 2503(b) shall be increased to $133,000 to a noncitizen spouse
(b) Charitable deduction
(i) §2522(a)- can deduct gifts to or for the use of the US, any state, or political subdivision, a 501(c)(3) corporation, a fraternal society for religious, charitable, scientific, literary, or educational purposes, and to posts or organizations of war veterans. charitable gifts unlimited as long as direct gift just like marital
d) Taxable Gifts
i) Apply tax rates per §2502
e) Tax before credit
i) Deduct credit per §2505
ii) Unified credit §2010- $1,455,800 credit, exclusion amount= $3,500,000
f) Tax due
g) Annual exclusion: in general
i) 2503(b)
(1) $10,000 per donee- indexed to $13,000
ii) 2513(a)-(b)- Gift splitting

e in taxable gifts required under §2701(d) the value shall be the value as finally determined under chapter 12
(2) A value shall be treated as finally determined for purposes of chapter 12if the value is shown on a return and not contested by the Secretary before the expiration of SOL, the value determined by the Secretary and such value is not timely contested by the taxpayer, or the value is determined by a court or pursuant to a settlement agreement with the Secretary
ii) 2504(c) Valuation of Gifts
(1) If the time has expired under §6501 within which tax may be assessed on the transfer of property made during the proceeding calendar period(§2502(b) or an increase in taxable gifts required under §2701(d) the value shall be the value finally determined (for the purposes of 2001(f)(2))
iii) 6501(a)- The amount of tax imposed by this title shall be assessed within 3 years after the return was filed or, if the tax is payable by stamp, at any time after such tax became due and before the expiration of 3 years after the date on which any part of such tax was paid and no proceeding in court without assessment for the collection of such tax shall be begun after the expiration of such period
(1) (c)(9) Gift Tax on Certain Gifts not Shown on Return- if any gift of property the value of which is required to be shown on a return is not shown on a return any tax imposed on such gift may be assessed, or a proceeding in court for the collection of such tax may be begun without assessment at any time
iv) 301.6501(c)-1(f)(1)-(3)
k) Gift tax problem
i) 6075(b)(1)- Gift Tax Returns- returns made under section 6019 shall be filed on or before the 15th day of April following the close of the calendar year
ii) 6151(a)- when a tax return is required the person required to make such return shall, without assessment, notice, or demand pay such tax
2) Valuation