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Module 40 Taxes: Gift and Estate: A ' - , (, ' S,, S, ' S - , - C S - .
Module 40 Taxes: Gift and Estate: A ' - , (, ' S,, S, ' S - , - C S - .
and federal estate taxes are not deductible in computing a poses, income in respect of a decedent will be included in
decedent's taxable estate. Note that although foreign death the decedent's gross estate at its fair market value on the
taxes are not deductible in computing a decedent's taxable appropriate valuation date. For income tax purposes, the
estate, a limited tax credit is allowed for foreign death taxes income tax basis of the decedent (zero) transfers over to the
in computing the net estate tax payable. estate or beneficiary who collects the fee. The recipient of
the income must classify it in the same manner (i.e., ordi-
19. (a) The requirement is to determine whether federal nary income) as would have the decedent. Thus, the ac-
estate tax returns must be filed for the estates of Eng and counting fee must be included in Ross' gross estate and must
Lew. For a decedent dying during 2009, a federal estate tax also be included in the estate's fiduciary income tax return
return (Form 706) must be filed if the decedent's gross estate
exceeds ($3,500,000). If a decedent made taxable lifetime
gifts such that the decedent's applicable transfer tax credit
was used to offset the gift tax, the ($3,500,000) exemption
amount must be reduced by the amount of taxable lifetime
gifts to determine whether a return is required to be filed.
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