HC:\! FWM fall 2007\! fwm fall 07 chap 4 SYLLABUS.wpd 9/24/07 1:07 pm

CHAPTER 4 GIFT & ESTATE TAX SYLLABUS

2007 Gift Tax Amounts$12,000 annual exclusion; $1 million exemption equivalent; rates: 41% on gifts between$1 million and $1,250,000; 43% on the next $250,000; 45% on all gifts over $1.5 million

2007 Estate Tax Amounts $2 million exemption equivalent in 2007-2008; $3.5 million in 2009; tax rate is 45%

A. OVERVIEW

264, up to ¶ 4,025 on 269.

B. THE GIFT TAX

What is a Gift? 277 through the second sentence of the first full paragraph on 279.

What is Property? first two full paragraphs on 280.

Completed Gifts: first paragraph of ¶ 4,110 on 280-281 and the full paragraph on the middle of 284.Do problem 1 on h/o 70.

Valuation: 285.

Income Interests and Remainders: 286 through the first full paragraph on 287; problem 2 on h/o 70.

Closely held business interests: first full paragraph on 288.

Gift Subject to a Condition: If a gift is subject to a condition, the value of the condition is subtractedfrom the FMV of the gift to determine the “net” gift for gift tax purposes. Do problem 3 on h/o 70.

Annual Exclusion: bottom of 292 to the last paragraph on 294.

Gifts to Children: h/o 72-73; bottom of 292-294. Do problem 4 on 296 and problem 2 on h/o 70.

Education and Medical Expense Exclusion: first paragraph on 297; do problem 4 on h/o 70.

Disclaimers: 297-298.

C. THE ESTATE TAX

Gross Estate: 299 to 300. Do problem 2 on 301, assuming the value of the ticket is included inZoe’s estate and the current interest rate is 6%. What effect will the income tax liability on the prizehave on the estate?

Joint Tenancies: 301 to 303; answer these questions about the facts in problem 1 on 303:

(a) What were the gift tax consequences when Christine created the joint tenancy?(b) How much is included in Alex’s estate when he dies?(c) How much is included in Christine’s estate when she dies?(d) How would you answer the questions if Alex was her husband, not her son?

Survivor Annuities: Rule: The gross estate includes the benefits payable to the survivors underretirement plans, such as a 401(k) and an IRA.

Life Insurance: first paragraph on 304 and the second and third paragraphs on 305.Retained Powers: h/o 74 and do problem 5 on h/o 71.

IC:\! FWM fall 2007\! fwm fall 07 chap 4 SYLLABUS.wpd 9/24/07 1:07 pm

Powers of appointment: 315 through the second full paragraph on 316; last paragraph on 317.

Deductions and Credits: first two paragraphs on 318. Most states have an estate tax. In Illinois, the first $2 million of an estate is exempt and the Illinoisestate tax rates range from 8% to 16% on estates over $10 million. Any estate tax paid to a state isdeducible from the gross estate for Federal estate tax purposes.

Marital Deduction and Unified Credit: h/o 76-79; bottom of 319 to 322; ¶ 4,400 on 328-329. Doproblem 6 on h/o 71 and the problem on 329.

Charitable Deduction: Read the first paragraph of ¶ 4,350 on 323.

D. THE GENERATION-SKIPPING TRANSFER TAX

Skim 330 to the first full paragraph on 331 and the last full paragraph on 334.

E. INCOME TAXATION OF TRUSTS

335-337; the 2007 income tax rates on estates and trusts are on h/o 43.