Common Estate and Gift Tax Terms and IRS Definitions

U.S. Estate Tax

Estate Tax – The estate tax is a tax on your right to transfer property at your death. It consists of an accounting of everything you own or have certain interests in at the date of death.

 

Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return

Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return – The executor of a decedent’s estate uses Form 706 to figure the estate tax imposed by Chapter 11 of the Internal Revenue Code. This tax is levied on the entire taxable estate and not just on the share received by a particular beneficiary. Form 706 is also used to figure the generation-skipping transfer (GST) tax imposed by Chapter 13 on direct skips (transfers to skip persons of interests in property included in the decedent’s gross estate).

 

Generation-Skipping Transfer (GST) Tax

Generation-Skipping Transfer (GST) Tax – The tax is imposed (with certain exemptions) on the occurrence of any one of three taxable events: a taxable termination, a taxable distribution (including distributions of income), and a direct skip (an outright transfer to or for the benefit of a person at least two generations below that of the transferor).

 

U.S. Gift Tax Definition

Gift Tax – The gift tax is a tax on the transfer of property by one individual to another while receiving nothing, or less than full value, in return. The tax applies whether the donor intends the transfer to be a gift or not.

 

Marital Deduction

Marital Deduction – One of the primary deductions for married decedents is the Marital Deduction. All property that is included in the gross estate and passes to the surviving spouse is eligible for the marital deduction. The property must pass “outright.” In some cases, certain life estates also qualify for the marital deduction.

 

Portability Election Between Spouses

Portability Election – The portability election passes along a decedent’s unused estate and gift tax exclusion amount to a surviving spouse.

 

Schedule PC, Protective Claim for Refund

Schedule PC, Protective Claim for Refund – A protective claim for refund preserves the estate’s right to a refund of tax paid on any amount included in the gross estate which would be deductible under section 2053 but has not been paid or otherwise will not meet the requirements of section 2053 until after the limitations period for filing the claim has passed.