Estate, Trust and Gift Taxation

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  1. A fiduciary is a person in a position of special confidence toward another who:
    • holds property for which another person has beneficial title or interest and/or
    • recieves and controls income of another
    • Examples of fiduciary: trustee of a trust and executor of an estate.
  2. Taxation of Estates
    • Income Tax: income tax is due based on income earned while the estate is in existence.
    • Estate Tax: estate tax is a transfer tax based on the value of the decendent's estate (taxed to the estate before the property is transferred).
  3. Unified Estate and Gift Tax
    • The estate and gift tax have been unied into a single transfer tax.
    • Gifts of $13,000 or les per year/per person are excluded.
  4. Distributable Net Income (DNI)
    • Estate (Trust) Gross Income
    • -Estate (Trust) deductions
    • = Adjusted Total Income
    • + tax exempt income
    • -capital gains

    =distributable net income (DNI)
  5. Estate (Trust) Net Income
    gross income is generally determined in the same manner as for individuals. It includes capital gains.
  6. Estate (trust) deductions
    deductions are allowed for ordinary and necessary expenses incurred in:

    • 1. carrying on a trade or business
    • 2. production of income
    • 3. management or conservation of income-producing property (including the trustee's or executor's fees)
Card Set
Estate, Trust and Gift Taxation
Becker CPA Review: Regulation
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