Also known as: estate taxes · death tax
Written by attorneys · grounded in primary & secondary sources — see below
An excise tax levied on the privilege of transferring property at death and measured by the size of the decedent’s estate. The tax is computed on the value of the gross estate after allowable deductions and credits and is paid by the estate before distribution to beneficiaries.
Ethan Evans dies owning an office building subject to a senior mortgage. His estate must file a federal estate tax return reporting the building's fair market value. The executor pays the resulting estate tax from estate assets before distributing the equity to heirs.
Eduardo Enriquez's estate includes real estate encumbered by a junior mortgage whose receiver collected rents before a senior receiver was appointed. The estate tax return treats the net rents after taxes and maintenance as part of the gross estate. The executor applies the excess to reduce the taxable estate value.
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Enzo Eastwood's will directs payment of all death taxes from the residuary estate. His executors pay New York and other state inheritance taxes. The federal estate tax return deducts those payments when computing the taxable estate.
Elijah Edwards's estate involves a disputed property interest resolved in state court. The federal estate tax authorities are not bound by that characterization. The IRS independently determines the value includible in the gross estate for tax purposes.
Erika Echevarria's estate claims a charitable deduction for a bequest to a university. The IRS denies the deduction because the university's policies violate public policy. The estate tax is computed without the deduction.
Esther Eisenberg's will incorporates a memorandum listing specific items of tangible personal property. The executor values those items for the estate tax return at their date-of-death fair market value. The listed items reduce the taxable estate when distributed according to the memorandum.
An estate tax is levied on the privilege of transferring property at death and is measured by the size of the decedent’s entire estate. An inheritance tax is levied on the privilege of receiving property and is graduated according to each beneficiary’s share and relationship to the decedent.
The personal representative of the estate pays the tax before distributing property to beneficiaries. The tax is computed on the value of the gross estate after allowable deductions and credits.
The unified credit may be applied against the estate tax or the gift tax or both. It reduces or eliminates tax on transfers up to the applicable exemption amount.
Inter vivos gifts remove assets from the decedent’s gross estate and are valued at the date of the gift. Post-gift appreciation is therefore not included in the taxable estate.
…That same year, the Bureau of Internal Revenue expressed a similar view of the charitable deduction section of the estate tax contained in the Revenue Act of 1918, ch. 18, § 403(a)(3), 40 Stat. 1098. The Solicitor of Internal Revenue looked to the common law of charitable trusts in construing that provision, and…