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Estate Tax, IRS pdf
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PROGRESSIVE  REFERENCE CONSERVATIVE
     Foreign Tax Deferral      top
PROGRESSIVE  REFERENCE CONSERVATIVE
     Tax cuts      top
PROGRESSIVE  REFERENCE CONSERVATIVE
    Offshore Tax Havens      top
PROGRESSIVE  REFERENCE CONSERVATIVE
 
Estate Tax, IRS An estimated 42,239 Federal estate tax returns (Forms 706) were filed for 2004 decedents, a 61-percent decrease from the 109,562 returns filed for decedents who died in 2001, the last year for which a comparable estimate was made.1 This decrease is largely the result of the Economic Growth and Tax Relief Reconciliation Act of 2001(EGTRRA), which increased the filing threshold from $675,000 for 2001 deaths to $1.5 million for 2004 deaths. Estate tax returns filed for 2004 decedents with gross estates above $1.5 million reported a combined $185.9 billion in total gross estate. The largest asset type in the overall portfolio of these decedents was publicly traded stock, valued at $51.5 billion, followed by investment real estate and tax-exempt bonds, valued at $27.2 billion and $18.3 billion, respectively. Estates also reported about $3.0 billion of assets held in family limited partnership interests (FLPs). Valuation discounts taken against total assets accounted for $6.5 billion. Of this total, $3.5 billion were reported on assets held in FLPs. Approximately 20.6 percent of returns filed for 2004 decedents reported a bequest to charity. Larger estates were more likely to report a charitable bequest and, on average, left a larger share of total gross estate to charity. After accounting for charitable bequests, marital bequests, and other deductions and credits, about 45.7 percent of returns filed for 2004 decedents reported estate tax liability. These 19,294 returns combined reported $22.2 billion in net estate tax. Background: Federal transfer tax law and eGtRRA of 2001 The Federal estate tax, the gift tax, and the generation- skipping transfer tax compose the Federal transfer tax system. The Federal estate tax, passed into law with the Revenue Act of 1916 and described in Internal Revenue Code (IRC) section 2001, is neither a tax on property nor an inheritance tax on the receipt of property. Rather, the estate tax is a tax on the right to transfer property at death. For deaths that oc- Federal estate tax Returns Filed for 2004 Decedents By Brian G. Raub curred in 2004, the filing threshold for property transfers at death was $1.5 million in total gross estate. The gift tax, applied to lifetime transfers of property, was imposed by the Revenue Act of 1932, in part to prevent estate tax avoidance. Prior to passage of the 1932 Act, individuals could transfer assets during life and thereby avoid estate taxation at death. Under current law, an individual may give up to $12,000 per year to any number of recipients with no Federal gift tax liability. The generation-skipping transfer (GST) tax, imposed by the Tax Reform Act (TRA) of 1976 and later modified by the 1986 Tax Reform Act, ensures that the transmission of hereditary wealth is taxed at each generational level. This additional tax is applied to the value of property transferred to an individual or individuals two or more generations below that of the decedent. The creation of GST trusts, distributions from the principal of trusts, and the termination of income interests are taxable events under generationskipping transfer tax law. Direct transfers are also taxable under GST law. Qualifying transfers in excess of $1.5 million are currently subject to the generation-skipping transfer tax. On passage of TRA of 1976, estate and gift taxes shared a unified framework of graduated and progressive tax rates, while the generation-skipping transfer tax applied the maximum Federal estate tax rate to taxable generation-skipping transfers. With the Economic Growth and Tax Relief Reconciliation Act (EGTRRA) of 2001, Congress made significant changes to the Federal transfer tax framework. Most noteworthy, of course, was lawmakers’ decision to eventually repeal the estate tax, as well as the generation-skipping transfer tax. The exemption amount for estates increased from $675,000 for 2001 deaths to $1.0 million for 2002 deaths to $1.5 million for 2004 deaths (Figure A). The exemption increased to $2.0 million for 2006 deaths and will rise to $3.5 million for 2009 deaths. For 2010 deaths, no estate tax will apply.

List of major tax havens. Lowtax.net

Andorra

Anguilla

Anjouan

Aruba

Bahamas

Barbados

Belize

Bermuda

Botswana

British Virgin Islands

Cayman Islands

Cook Islands

Costa Rica

Cyprus

Dubai

Gibraltar

Grenada

Guernsey

Hong Kong

Ireland

Isle of Man

Jersey

Labuan

Liechtenstein

Luxembourg

Madeira

Malta

Mauritius

Monaco

The Netherland Antilles

Panama

Seychelles

St. Vincent and the Grenadines

Switzerland

Turks & Caicos Islands

Vanuatu