Chapter
1 Chapter 12: The Gift Tax
THE GIFT TAX Unified transfer tax system Transfers subject to gift tax Annual exclusion Deductions Gift-splitting Tax computation
2 THE GIFT TAX Unified transfer tax system Transfers subject to gift tax Annual exclusion Deductions Gift-splitting Tax computation
Unified Transfer Tax System Excise tax imposed on transfer of wealth when adequate consideration not received as part of exchange Components of transfer tax system Purpose of transfer taxes Tax on wealth transfers Cumulative and progressive tax 3
3 Unified Transfer Tax System Excise tax imposed on transfer of wealth when adequate consideration not received as part of exchange Components of transfer tax system Purpose of transfer taxes Tax on wealth transfers Cumulative and progressive tax
Components of Transfer Tax System Gift tax: Inter vivos transfers Transfers while alive Estate tax: Testamentary transfers Property ownership transfers at death Generation-skipping transfer tax Property transferred to a second or younger generation
4 Components of Transfer Tax System Gift tax: Inter vivos transfers –Transfers while alive Estate tax: Testamentary transfers –Property ownership transfers at death Generation-skipping transfer tax –Property transferred to a second or younger generation
Purpose of Transfer Taxes Raise revenue for federal government Prevent evasion of estate tax Recover revenues lost by shifting assets to taxpayer in lower income tax bracket Redistributing wealth 5
5 Purpose of Transfer Taxes Raise revenue for federal government Prevent evasion of estate tax Recover revenues lost by shifting assets to taxpayer in lower income tax bracket Redistributing wealth