[REG] Gift taxation and Trusts

inheritance인 경우

- 사망일의 FMV

- Alternate Valuation Date 선택하게 해준다

- 항상 LT으로 해준다

 

gift transfer

- 기본적으로 FMV가 NBV보다 높은 편이고, NBV를 사용하는 것이 원칙 

- 양도하는 날 기준 NBV가 FMV보다 높다면, Gain NBV, Loss FMV, nbv-fmv 사이면 0

 

Purchasing property for a business

Improvements(capitalize)

Repairs and maintenance

Materials and supplies 200 or less

 

Deminis safe harbor rule

- with AFS deduct up to 5000 per item

- without AFS deduct up to 2500 per item

 

 

 

[Transfer tax]

Unified transfer tax rate applies to both Gift(lifetime transfer) and estate(death transfer) tax

 

[Gift Tax]

 

1. Gift tax formula

   Gross gifts(cash plus FMV of property at the date of gift)

   (-) Annual exclusion (up to $ 15K per donee)

   (-) One-half of gifts are treated as given by a spouse (gift-splitting)

   (-) Unlimited exclusion for gifts to political organizations

   (-) Charitable gifts

   (-) Marital deduction

       Total taxable gifts

 

Unified transfer tax on total taxable gifts

(-) Unified transfer tax made on prior year's taxable gifts

Unified transfer tax for the current year

(-) Unified transfer tax credit($4,577,800) (equivalent $11,580K of taxable gift)

Lessunified transfer tax credit used in prior years

Net gift tax liability  

 

 

2. Gross gifts

gift occurs when the donor gives up ownership and control completely without adequate or full consideration

- joint ownership in property: donor's contribution exceeds donor's retained int

- joint bank account: individual withdraws funds more than the contribution

- Income from property(income int and remainder int) is a taxable gift

 

3. Deductions from gross gift

Annual exclusion

- Up to $15K per donee, if the gift is a present int(ownership)

- present int: Unrestricted right, immediate use, enjoyment of property

- future int: for the future time

 

Income int and remainder int

- income int: annual exclusion as a present int, if income is distributed annually

- Remainder int: future int, not qualified for annual exclusion

 

Trust for Minors > annual exclusion despite of future int

- income/principal distributed to the beneficiary before the beneficiary reaches age 21.

- Any income and principal not distributed should be distributed to the beneficiary at age 21

 

Gift spitting

- It can be elected by spouses only

- 1/2 of the gift is treated as given by the spouse, each spouse can get the annual exclusion

 

Tuition and medical expenses

- Unlimited exclusion for tuition or medical expenses paid on behalf of donee

- Tuition and medical expenses must be paid directly

 

Political contribution

- Unlimited exclusion for contributions made to political organizations is allowed

 

Charitable contribution

- Charitable gifts are excluded after an annual exclusion of $15K

 

Marital deduction

- gifts made to the spouse are excluded

 

4. Unified transfer tax credit

- 4,577,800 credit is equivalent to an exemption of the first 11,580K of taxable gifts

 

5. Gift tax return

- F709, calendar-year basis, due April 15

- automatic 6month extension

- Married taxpayers cannot file a joint return

 

 

Trust

- legal entity created by the transfer of property from a grantor

- to hold and administer property for beneficiaries according to the terms of the trust instrument

- Trust(Fiduciary) is taxed on income, not distributed to beneficiaries

- Income distributed to beneficiaries > beneficiary income, the beneficiary's tax year in which the trust year ends

 

Type

	Complex	Simple
1. Income Accumulation(안주고 남겨도됨)	Yes	No
2. Principal Distribution	Yes	No
3. Charitable Contribution	Yes	No