1. delivered to donee
2. donor must give up control of the property
3. donee must accept gift

1. tenants in common
2. tenancy by the entirety
3. joint tenancy with the right of survivorship

1. creation of joint ownership without adequate consideration creates a gift regardless of the form of ownership
2. transfers of cash to joint bank accounts do not constitute a complete gift until the donee withdraws the cash
3. purchase of a savings bond held jointly in the name of the donee and the donor is not a complete gift
4. creation of a joint interest with a spouse (with the right of survivorship) is not taxed because of the marital deduction
5. termination of a joint ownership may also trigger a tax, if the proceeds are not divided according to each owner's interest

1. payment of another unrelated individual's medical or educational expenses is not considered a gift if payments are made directly to the medical provider or the educational institution
2. political contributions are not gifts
3. satisfaction of an obligation is not a gift
4. annual exclusion of $13,000 per donee per year applies to gift of a "present interest"

present interest

right to income or to enjoy property currently

(gift to minor is considered a present if the minor has a right to enjoy it at age 21)

1. unlimited marital deduction for transfers to a spouse
2. unlimited charitable contribution deduction for transfers to charity

1. election is available each year
2. donor must be married at the time of the transfer
3. value of gift is divided in two and each spouse is treated as making a gift
4. both spouses can use an annual exclusion for gifts to present interests (both must file a gift tax return)

• unlimited in amount 
• amount is total gift less any excluded portion
• gifts of "terminable interest" do not apply

• charity defines similarly to income tax but includes foreign charities and excludes cemeteries
• no limitation on amount of deduction

1. determine current taxable gifts
2. add previous taxable gifts and calculate the total gift tax
3. reduce total gift tax by the tax computed on taxable gifts from previous periods
4. reduce any remaining gift tax by the unused portion of the unified credit 

1. april 15th is the due date for gifts made in the prior year
2. gift tax return (form 709) is due if gifts exceed the annual exclusion or if a gift is made of a future interest

includes property owned by the decedent at death and certain property transfers

1. valuation is FMV at date of death or the executor can elect to have the property valued on an alternative valuation date
2. alternative valuation is 6 months after date of death
3. alternate valuation is only available if causes gross income and estate taxes payable to decline
4. executor can elect to value certain realty used in farming or in connection with a closely help business at a "special use" valuation

• allows realty to be valued at a current use that does not result in the best or highest FMV
• allowable if decedent's family conducts the business, it constitutes a substantial portion of the gross estate, and property passes to heir
• decline in value for 2011 can't exceed $1,020,000

• decedent had incidents of ownership (right to designate beneficiary) OR
• decedent's estate or executor is the beneficiary of the insurance policy

1. value of decedent's interest as a tenant is included in gross estate
2. for jointly owned property by husband and wife, 50% of value of property will be included in estate of first spouse to die
3. jointly owned property with right of survivorship for unmarried owners, amount includible is the portion of the property equal to the proportion of the consideration that the decedent provided to acquire property

1. retained life estate or the retention of a power to alter, amend, or revoke a transfer are retained interests that cause the property subject to the power to be included in gross income
2. power to designate possession or enjoyment of property or income will cause property to be included in gross estate

1. tranfers with retained interests, revocable transfers, and transfers of life insurance are included in gross estate if made within past 3 years
2. property is include at date of death value
3. gift tax paid on the gift is included in the estate for gifts made within 3 years of death

spouse must receive property outright and be able to control its ultimate destination

1. property that passes to the surviving spouse as a result of joint tenancy qualifies
2. only the net value of property subject to mortgage qualifies
3. property rights that are terminable do not qualify
4. deduction is unlimited amount

1. election is made to use the marital deduction for a transfer to a spouse of less than a complete interest in trust
2. surving spouse must receive all of the trust income annually for life but decedent decides where the property goes at the surving spouses death
3. property must be included in surving spouse's estate at its value when the survivor dies

• deductible if funeral expenses or administartion expenses
• can be deducted on estate tax return or estate's income tax return

1. deductible without any floor limitation
2. must be incurred during the administartion of the estate
3. can be deducted on estate tax return or estate's income tax return

1. taxable estate is increased by adjusted taxable gifts (taxable gifts other then gifts already included in esate) made after 1976 
2. apply current tax rates to total transfers (max rate=35%)
3. reduce tentative transfer tax by gift taxes paid or payable on post 1976 gifts
4. subtracts unified credit and othe credits

• credit for "prior transfers" to adjust for taxes on proximate deaths (deaths within 10 years)
• credit for all or part of death taxes paid in a foreign country
• credit for taxes paid on any property gifted before 1977 and included in estate
• unified credit

1. levied on estate but installment payment of estate taxes is available for closely held business interests
2. estate tax return (form 706) is due 9 months after date of death
3. estate tax return must be filed if gross estate plus adjusted taxable gifts equals or exceeds the exemption equivalent

Generation Skipping Tax (GST)

 (definition and 3 rules)

supplemental tax that prevents avoidance of the transfer taxes by skipping one generation of recipients

1. triggered by the transfer of property to someone who is more than one generation younger than the donor or decedent
2. no applicable to transfer of property to someone who is momre than one generation younger than the donor or decedent, if the persons in the intervening generation are deceased
3. not widely applicable because most transfers qualify for an annual gift tax exclusion and eaxh donor/decedent is entitled to a large aggregate exemption

• first $5 million in 2011 of transfers from an estate and/or gifts will not trigger a tax liability
• unified credit on this $5 million is $1,730,800
• Cumulative for estate and gift