The program calculates the federal estate tax based only upon the following values:
- Assets
- Marital deduction
- Unified credit
- Amounts of adjusted taxable gifts
- Credit for gift tax paid
No other deductions or credits are considered. For simplicity, the program assumes that if the total taxable gifts exceed the unified credit applicable exclusion amount, a gift tax was paid on the gifts in excess of the applicable exclusion amount, and credit is taken for the gift tax assumed to have been paid. The actual gift tax could have been more or less than the assumed gift tax, depending on the timing of the gifts.
The Tax Relief, Unemployment Insurance Reauthorization, and Jobs Creation Act of 2010 reduced the estate tax rate to 35%, increased the unified credit exclusion amount to $5,000,000, and indexed the exclusion for inflation after 2011. The act also allows a surviving spouse to inherit the "spousal unused exclusion amount" from a spouse who dies after 2010, so that the surviving spouse may have an applicable exclusion of $10,000,000 (or more, with inflation to the survivor's own exclusion.) These changes were made permanent by the American Taxpayer Relief Act of 2012.
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