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Posted by Stuart A. Bronstein on April 17, 2006, 10:35 pm
Please log in for more thread options ddl@danlan.*com (Dan Lanciani) wrote:
> spamtrap@sbcglobal.net (Stuart A. Bronstein) writes:
>> ddl@danlan.*com (Dan Lanciani) wrote:
> If you previously paid gift tax because you exceeded the
> lifetime gift number but your estate (with add back) is
> under the estate tax number do you get a refund of the
> credit? (The "unified" gift and estate tax magic number
> for gifts is still just $1M, right?)
I haven't had this come up so I don't specifically know. My
guess is that you don't get anything back, but you just get
a (non-refundable) credit.
> I was thinking that you might have a credit with respect
> to a past gift that exceeds the tax that would be due on
> its reduced value in the estate. (Or is the value that
> is included in the estate the value that was used at the
> time of the taxable gift?) This seems like the kind of
> thing that often provokes special rules that insure that
> you lose both ways, e.g., limiting the credit to the
> lesser of the past tax paid and the present tax that
> would be due.
That's normally the way it works with lots of different
taxes. You can get a credit, but if you don't use it all up
you lose it and don't get back the difference.
> How is the portion owned by the child determined? Is it
> the portion of the property at fair market value that could
> be bought by the fair market value of the care? Or can a
> below-market transfer (with the difference as gift) be
> inferred to pessimize the tax result?
The laws and regulations aren't clear whether valuation is
based on equal proportions or actuarial value. If a
transfer is considered to be for less than fair market
value, only the portion actually paid for at market value
will be considered owned by the guyer.
> If the title is
> initially changed merely for purposes of passing on death
> and the child subsequently cares for the parent does the
> gift retroactively become a "purchase" for consideration?
Probably not. If it were done so that the change of title
were in exchange for the promise to care for the parent, it
could then likely work, though value of the promise to care
would have to be determined.
Stu
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