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kanba
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Joined: 06 Nov 2011
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Posts: 29

Posted: 08 Feb 2012 at 20:26 \| IP Logged

What does this line mean from Becker, "For the years 2010 and 2011, gifts of $13000 or less per year/per person are excluded, and the applicable credit for lifetime gifts(345800) exempts the first 1000000 of lifetime transfers."

Is the number for 2011 should be 1730800 exempts the first 5m?

How the applicable credit apply on both gift and estate tax?

Please help!

wen00wen
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Joined: 28 Mar 2011
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Posted: 18 Feb 2012 at 18:02 \| IP Logged

based on the becker update...the lifetime exemption should $5M.

gjtseng
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Joined: 26 Jan 2012
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Posts: 51

Posted: 18 Feb 2012 at 21:33 \| IP Logged

I have similar question too! The explaination is so hard to understand. Base on my understanding, this is how it might works. You can give money as gift for up to 13000 per person and per year for tax free. However, let say if you give 15000, then the excess 2000 will be tax, but not tax at that year. It will be accumulated until it hit the 1,000,000 then it will be taxed. This as far as i can understand.......my question is since the book said 1,000,000 is tax free, why there is a applicable tax credit of 345,800?

TaxProfMom
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Joined: 19 Mar 2010
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Posts: 112

Posted: 19 Feb 2012 at 00:06 \| IP Logged

Didn't you take estates & trusts? Per gift, there is a (currently) $13,000
exemption per person that can be shared among married people (so
married-to-married gift could be $52,000 per year). That doesn't include
direct payments for tuition or medical care.

If you exceed that, you have to file a gift tax return in which you either
pay the tax or use your lifetime uniform gift & estate tax exemption of
$1m in the example you were given. Most people "save' that for their
estate so they can often avoid paying any estate tax. Taxable gifts are
added back in to gross estate and then the tax paid is subtracted (but not
as a credit) out later.

The credit is the equivalent of the effective rate * the exclusion amount.

GL!

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