Commissioner held that, notwithstanding the check-the-box regulations, an SMLLC is respected for federal gift tax
federal gift tax
and in a properly drafted trust deed the assets are sufficiently out of the individual's control so as not to be subject to U.S.
(27) Specifically, whether a gift is a completed gift for purposes of federal gift tax
laws under Chapter 12 of the Code or whether an asset is included in a decedent's gross estate for purposes of federal estate tax laws under Chapter 11 of the Code.
By increasing the federal gift tax
exemption from $1 million to $5 million, clients can pay higher premiums and thereby purchase increased life insurance, tax-free.
The GST exemption is automatically allocated to lifetime direct skips unless otherwise elected on a timely filed federal gift tax
return (see Q 7600).
In addition to these federal gift tax
changes, there are numerous federal estate tax changes contingent upon when a taxpayer passes away.
Is the federal gift tax
imposed on gifts to charitable organizations?
Federal tax law allows for a general accelerated gift option that permits individuals to average gifts over $12,000 per beneficiary ($24,000 for married couples based on 2006 levels) over a five-year period without getting socked with a Federal gift tax
. So, an individual can contribute up to $60,000 per beneficiary in one year and a married couple up to $120,000 without incurring gift tax.
During the client's lifetime, neither federal gift tax
nor GST tax would be imposed on the cash used as premiums.
The estate owner could give his spouse up to an unlimited amount of property during his lifetime and pay no federal gift tax
because of the 100% gift tax marital deduction.
David Pratt of Pratt & Bucher, LLP, spoke at the Greater Fort Lauderdale Tax Council meeting; his speech was entitled "The Anatomy of the New Federal Gift Tax
Return, Including a Review of the Gift Tax Statute of Limitations, Gift Splitting Provisions and Proposed Regulations Regarding the Election out of the Automatic Allocation of Generation-Skipping Transfer Tax Exemption." Pratt and Jennifer Zakin also spoke at the Boca Raton Tax Institute meeting.
Because of this relatively high filing threshold, gift tax data extracted from Federal gift tax
returns provide a glimpse into the economic behavior of predominantly wealthy Americans.