Follow up on Unified credit and Applicable Exclusion for Estates and Gifts
- From: "boostm3" <elliott.paule@xxxxxxxxxxxxxxxxxxxx>
- Date: Wed, 13 Sep 2006 10:46:53 -0400
Im having difficulty in understanding the key elements in the following
table. For instance, what is the relationship between the 'Unified Credit'
and the 'Applicable Exclusion Amount', both when speaking about Gift tax AND
when speaking about Estate tax.. The amounts are different, and I would
value an example of how they would be applied on an estate of , say,
$3,000,000.
I already know that for this year and the next two, the $2,000,000 estate
tax Applicable Exclusion amount reduces estates by that amount before being
subject to taxation. I also know that if a gift has been given that
exceeds $12k this year, that a gift tax must be figured on the overage, and
then that calculated amount gets subtracted from the Unified Gift Tax credit
amount of $345,800, leaving a smaller credit to be used for future years.
What I need help in understanding is, lets say the Unified Credit for gift
taxes has been reduced from $345,800 to $300,000 because of annual gifts
exceeding $12,000 being handled in the example I gave in the prior
paragraph. How does this remaining $300k credit interract with the Federal
Estate tax unified credit? Whats the $780,800 amount in the table for and
how is it used? And what is the relationship between the Unified Credit AND
the Applicable Exclusion amount.. how do they function together, both in
the Gift tax amounts, and in the Estate Tax amounts given in the table?
I know this is a large question to be asking in this newsgroup, but Ive done
hours of research and read all the IRS papers, and Im still left with this
question. Thanks.
For Gift Tax Purposes:
Year Unified Credit Applicable Exclusion Amount
2006 345,800 1,000,000
For Estate Tax Purposes:
2006 780,800 2,000,000
Paul E.
.
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