This section of the exam covers matters related to estate and gift taxes. Estate taxes are imposed on an heir's inherited portion of an estate if the value of the estate exceeds an exclusion limit set by law. Gift taxes, on the other hand, are federal taxes applied to an individual who gives anything of value to another person. For the item to be considered a gift, the recipient cannot pay the giver the full value of the gift (but may pay some amount less than the full value). It is the giver who has the tax burden.

Estate Tax
Careful estate planning is important because estate taxes can significantly (and negatively) affect an heir's inheritance. The estate tax is mostly levied on assets left to heirs, but does not apply to the transfer of assets to a surviving spouse. The right for a spouse to leave any amount of assets to another spouse is known as the "unlimited marital deduction." As an Enrolled Agent, you should understand concepts related to a client's estate tax liability including:

Gift Tax
Certain gifts are typically excluded from the gift tax, including gifts to a spouse, gifts to political organizations that will be used by the political organization, gifts that are valued below the annual gift tax exclusion for a particular year, and medical and educational expenses. As part of estate planning, gifts may be given each year up to the maximum amount allowed by law. Enrolled Agents should be familiar with laws regarding the gift tax including:



Types Of Businesses

Related Articles
  1. Taxes

    What Are Gift Taxes?

    If you're not sure what gift taxes are, read on and we'll explain.
  2. Retirement

    Top 7 Estate Planning Mistakes

    Many people try to avoid this process altogether, making things difficult for heirs.
  3. Insights

    Gift-Giving Etiquette

    Here's a look at how much you should spend and what you should give this holiday season.
  4. Financial Advisor

    How Estate Taxes Work, A Real Life Example

    The estate tax is frequently misunderstood. Learn more details about exactly how estate, or inheritance, taxes work in the United States.
  5. Taxes

    Planning For The Estate Tax's Return

    The 2010 estate tax lapse could be costly to your family if it keeps you from planning.
  6. Taxes

    Estate Taxes: Who's on the Hook?

    Inheritance taxes can be tricky. Most people have to deal with them at a very inconvenient time. It's better to learn the laws now so you're ready later.
  7. Taxes

    10 Sources of Nontaxable Income

    Taxes are often a deterrent from investing and saving. These financial practices will bring you no tax grief.
  8. Insights

    3 Best And Worst Gift Cards For 2012

    Here are the gift cards that offer the best deals and those that aren't worth your money.
  9. Personal Finance

    6 Tips For Getting The Most Out Of Gift Cards

    Gift cards are big business, amounting to an estimated $91 billion in annual retail spending. Get the most bang for your gift card buck.
Frequently Asked Questions
  1. Depreciation Can Shield Taxes, Bolster Cash Flow

    Depreciation can be used as a tax-deductible expense to reduce tax costs, bolstering cash flow
  2. What schools did Warren Buffett attend on his way to getting his science and economics degrees?

    Learn how Warren Buffett became so successful through his attendance at multiple prestigious schools and his real-world experiences.
  3. How many attempts at each CFA exam is a candidate permitted?

    The CFA Institute allows an individual an unlimited amount of attempts at each examination.Although you can attempt the examination ...
  4. What's the average salary of a market research analyst?

    Learn about average stock market analyst salaries in the U.S. and different factors that affect salaries and overall levels ...
Trading Center