Inputs
Date of Death - Enter the date that the decedent died for an estate tax calculation. Enter the date the gift is made for a gift tax calculation. Valid Year inputs are 2000 through 2050. If the year entered is 2010, then there is a choice between no estate tax and a 35% rate.
Adjusted Gross Estate - Enter the value of the Tentative Taxable Estate (the net estate after all deductions other than the section 2057 deduction) for an estate tax calculation.
Prior Taxable Gifts - Enter the amount of any taxable gifts made previously. If there are no prior Adjusted Taxable Gifts, the tentative tax base will be equal to the Taxable Estate. The software does not handle gifts between 9/8/1976 and 1/1/1977 that used the specific exemption.
Unified Credit Used - Enter the amount of unified credit used by prior gifts. If there are no prior gifts, then no unified credit has been used. For years after 2009, the amount of unified credit used must be recalculated using current tax rates.
Spousal Unused Excl - Enter the amount of any "deceased spousal unused exclusion amount" to which the decedent/donor is entitled by reason of the death of a spouse after 2010 whose estate tax return did not use up the full unified credit exclusion amount. Click on the computer icon to the left of the entry field to calculate the maximum exclusion amount for the year of the spouse's death, taking into account the inflation rate entered for the exclusion.
QTIP Adjustment - This input will appear when you select a state that can make a qualified terminable interest property ("QTIP") election under I.R.C. Section 2056(b)(7) for the purpose of the state estate tax that is different from the election made for federal estate tax purposes. Enter the value of any trust or property which is included in the decedent's gross estate for state death tax purposes but not federal estate tax purposes because of a state-specific QTIP election. Because the value of the state-specific QTIP property is not included in the federal gross estate, the state death tax attributable to that property is not deductible under IRC section 2058.
Out-of-State Property - If the federal taxable estate includes real or tangible property which is outside of the decedent's domicile and so not subject to tax in the decedent's domicile, enter the total value of that property here. The program will calculate the tax on the decedent's entire estate and then reduce the tax in proportion to the value of the out-of-state property. If the value of the property should be entirely excluded from state death tax calculations, enter the value of the property in the State Adjustment described below.
Inflation Rate - Enter the rate of inflation to be applied to increase the unified credit exclusion amount in future years.
Ret.Plans Excluded - This input will appear when you select a state that excludes retirement plans from the taxable estate for the inheritance tax calculation.
Insurance Excluded - This input will appear when you select a state that excludes insurance proceeds from the taxable estate for the inheritance tax calculation.
Inheritance Recipient Class - This field will appear if a state has an inheritance tax with different rates for different classes of beneficiaries. Classes are defined differently by each state, so click on the "+" button to see the possible classes for the selected state, and then select the class receiving the estate and click on "Save" to enter the number of the class in the field to the right.
Number of Beneficiaries - Enter the number of beneficiaries.
State Adjustment - Enter any amount by which the state taxable estate will be more than, or less than, the federal taxable estate. For example, if the selected state does not tax farmland, the value of the farmland might be entered as a negative number, or if the state imposes a tax on lifetime gifts within a short time of death, those gifts might be entered as a positive number.
Results
The program displays the amount of federal gift tax that is payable if a lifetime gift is made, or the federal estate taxes that are payable if a transfer at death is made. The results also show the net estate remaining and the percent of the estate that is lost to the federal gift tax and federal estate tax.
For years after 2004, the state death tax is deducted from the taxable estate in calculating the federal estate tax, but the deduction is only for the tax paid "in respect of any property included in the gross estate." If there is a "QTIP Adjustment" entered for a state that allows a qualified terminable interest property election separate from the federal election (which would include Connecticut, Illinois, Maine, Maryland, Massachusetts, Minnesota, Oregon, Rhode Island, and Washington), so that there is QTIP property that is subject to the state death tax but not the federal estate tax, the deduction is proportionate to the QTIP adjustment as a percentage of the taxable estate for the state death tax.
For simplicity sake, not all possible credits are calculated in the calculation's results. The purpose of this calculation is to produce a quick, accurate estimate of the potential federal estate tax.
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