The increase in other federal government tax revenue would more than offset the decline in the estate tax portion of the estate and gift tax.
It is important to note that the tests for income tax residence and transfer tax (gift and estate tax) residence are quite different.
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So will both the estate tax and the gift tax be repealed ?
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Note: If you die within three years of making a taxable gift, the original value of the gift and the gift tax get added back to your estate and the gift tax paid is credited toward your estate's tax bill.
The Federal income tax and the transfer tax (i.e. estate, gift and GST tax) systems are separate and distinct.
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But after that, such gifts become subject to a double layer of taxation the GST tax and either the estate tax or gift tax, which donors pay after their transfers exceed certain levels.
Such expenses, however, are in essence deductible from another American tax, and the largest single one facing the Romneys: the gift and estate tax.
Both the size of the figure and the gift and estate tax parity were huge surprises.
And in a gimme to the rich, it includes unifying the gift tax and the estate tax.
Then there is the estate and gift tax mess, making it almost impossible to plan.
Different rules apply for federal estate and gift tax purposes, as well as state law.
JCX-1-11 also provides an informative table summarizing the estate and gift tax rates and exemption amounts from 1975-2011.
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The Republicans have robbed the bank and the estate and gift tax (change) is the jewel of the robbery.
Still other experts write on estate and gift tax strategies and asset protection.
After the three years, any appreciation over the hurdle rate goes to your kids, free of estate and gift tax.
For advice on rewriting your will in line with the new federal estate and gift tax laws, click here.
Nonetheless, the gift of a profits interest could violate special estate and gift tax valuation rules for freeze transactions (section 2701).
Estate and gift tax rules ended up being more favorable than what many expected, but they remain a threat to business owners.
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One of the most significant changes is the ability of married spouses to transfer the estate and gift tax exemption between each other.
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As it stands today, on January 1, 2013, the federal estate and gift tax law will revert to those which were in effect in 2001.
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Furthermore, it is likely that the federal government will initiate unfavorable changes to the estate and gift tax laws in order to compensate for government deficits.
The technique, known as a grantor retained annuity trust, or GRAT, allows rich families to pass on wealth while dramatically cutting their estate and gift tax bills.
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"On wealth that great, it's far harder to avoid U.S. estate and gift tax than to avoid income tax, especially if you are unmarried, " Mr. Miller says.
In addition, the estate and gift tax will remain "unified, " meaning an individual can use his or her entire exemption to make gifts while alive instead of waiting until death.
For more on the year-end rush to make gifts and how a proposal by Senator Baucus would chill it, see Ashlea Ebeling, Estate And Gift Tax Bombshell (The Best Revenge).
Federal estate and gift tax numbers are moving, too.
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Since the president and Republicans are looking for a 35% estate and gift tax rate in 2011, a 45% rate in effect only for this December is not likely to happen, says Andrew Katzenstein, a personal planning attorney with the law firm Proskauer.
If the value of the assets in the trust (say Wal-Mart ( WMT - news - people ) stock) grows at more than 3.2% a year, the children or other trust beneficiaries get that excess appreciation, free of estate and gift tax.
For wealthy individuals, the potential financial damage that could have been caused by enactment of the most onerous of the proposed income tax provisions pale when compared to the financial carnage that would have resulted from the sunset of the Bush-era estate and gift tax laws.
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