Mak Wilson wrote:

- quote -

If it's called inheritance tax it's probably imposed by your
state. If it's imposed by the federal government, it's
called estate tax.

For inheritance tax you have to let us know which state you
live in. For estate tax, the amount of the exemption depends
on the year of death.

- quote -

Each child will get his exemption amount. But other than
that what you pass on will be taxed again in subsequent
generations.

- quote -

You and your wife each get your own personal exemption
amounts.

Stu

<< -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << ------------------------------------------------->

mydeadpresidents[at]yahoo.com (Mak Wilson) writes:

- quote -

There's no federal inheritance tax.

There is, however, a federal estate tax.

- quote -

Technically, the tax kicks in at the very first dollar
of the taxable estate of the decedent. However, everyone
gets a unified gift/estate tax credit that offsets the
tax due on the first $1,500,000 of the estate.

- quote -

Yes.

- quote -

No.

- quote -

No.

To be concrete, let's say you die worth $3,000,000. The
"raw" estate tax on that will be $1,260,800. The unified
credit will reduce it by $555,800, resulting in an estate
tax liability of $705,000. The estate will pay that
$705,000 to the IRS, leaving $2,295,000 available for heirs.
That $2,295,000 goes to the heirs without further federal
tax (unless some heirs are more than one generation away
from the decedent, in which case the Generation Skipping Tax
may apply).

- quote -

You and your wife are each separately subject to the estate
tax. So your wife's estate will have an estate tax
liability when she dies (though not on assets passing to
*you* -- there's an unlimited exemption for assets passing
between spouses) then your estate will have an estate tax
liability when you die.

--
Rich Carreiro rlcarr[at]animato.arlington.ma.us

<< -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << ------------------------------------------------->

I have a couple questions about inheritance tax. If I'm
correct, the tax only applies to inheritances passed down
with values over... $375,000? What's the actual number at
which the tax kicks in? Does the tax apply once for the
whole inheritance balance or does it reset for each
desendent. In other words, if I have a million bucks, I'm a
single parent and have two adult independent children, does
each child get $375,000 tax free before tax hits (fully
realizing my ceiling number is inaccurate)?

Also, say I have a spouse and we jointly have several
million dollars. She dies and we have two adult independent
children. Her trust states that each child get's 1 million
dollars. Inheritance taxes apply.

A few years later, I die leaving the remainder of our
assests to the same two children. Does the first dime get
hit with the tax or does it start over again until hitting
the $375,000 ceiling?

Thanks for indulging me and thanks for the info.

<< -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << ------------------------------------------------->