Part 1 - Individuals - Specialized Returns For Individuals

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

    How & Where to File Form 1040 (And Which Version)

    All taxpayers need to know three things when filing a 1040: which form to use, how to file and where to file. After reading this, you'll know all three.
  2. Savings

    Should You Look at 529 Plans Outside Your State?

    529 savings plans are not restricted by geography. So if your in-state offering has high fees or poor investment choices, look elsewhere.
  3. Taxes

    5 States Without Sales Tax

    Learn about the five states that do not charge sales taxes and about other taxes the states levy instead in order to generate revenue.
  4. Investing Basics

    How to Deduct Your Stock Losses

    Held onto a stock for too long? Selling at a loss is never ideal, but it is possible to minimize the damage. Here's how.
  5. Taxes

    10 Money-Saving Year-End Tax Tips

    Getting organized well before the deadline will curb your frustration and your tax liability.
  6. Taxes

    2016 Tax Code Changes Add Some Wiggle Room

    It's never too early to prepare for tax season. Next year features a host of tax law changes. Check our handy list to see which ones apply to you.
  7. Taxes

    End-of-the-Year Checklist to Save on Income Taxes

    From grouping related expenses to factoring in the alternative minimum tax, here are some things you need to keep in mind when doing tax planning.
  8. Insurance

    Avoid the Obamacare No-Insurance Penalty by Jan. 31

    If you don't have health insurance, act NOW or you could owe penalties on your 2016 taxes, in addition to this year's.
  9. Taxes

    Before You Visit Your Tax Preparer: Do This

    The earlier you start preparing your tax records and documents, the more likely you are to have a smooth tax return experience – and all the tax benefits you're due.
  10. Taxes

    Why Your Tax Bracket Is Not the Tax Rate You Pay

    Understanding how federal and state tax brackets work is important for tax planning – and for making sense of the political conversation around tax reform.
  1. Skinny Down Distribution

    Skinny down distribution is corporate practice of slimming down ...
  2. Structured Transaction

    A series of transactions that could have been treated as a single ...
  3. Tax Deductible Interest

    A borrowing expense that a taxpayer can claim on a federal or ...
  4. Working Tax Credit (WTC)

    A tax credit offered to low-income individuals working in the ...
  5. Proof of Charitable Contributions

    Substantiation required by the Internal Revenue Service for a ...
  6. Quid Pro Quo Contribution

    A charitable donation for which the donor receives something ...
  1. Is dental insurance tax deductible?

    Dental insurance premiums may be tax deductible. To be deductible as a qualifying medical expense, the dental insurance must ... Read Full Answer >>
  2. Are personal loans tax deductible?

    Interest paid on personal loans is not tax deductible. If you take out a loan to buy a car for personal use or to cover other ... Read Full Answer >>
  3. Are Flexible Spending Account (FSA) contributions tax deductible?

    The contributions you make to your Flexible Spending Account (FSA) are not tax-deductible because the accounts are funded ... Read Full Answer >>
  4. Do Flexible Spending Accounts (FSAs) expire?

    Flexible Spending Accounts (FSAs) do expire and are considered to be a "use it or lose it" type of plan. They are savings ... Read Full Answer >>
  5. Do 401k contributions reduce AGI and/or MAGI?

    Traditional 401(k) contributions effectively reduce both adjusted gross income (AGI) and modified adjusted gross income (MAGI). ... Read Full Answer >>
  6. Is homeowners’ insurance tax deductible?

    While your fire or homeowners' insurance premiums may be included in your property payments, they are nondeductible expenses, ... Read Full Answer >>
Hot Definitions
  1. Barefoot Pilgrim

    A slang term for an unsophisticated investor who loses all of his or her wealth by trading equities in the stock market. ...
  2. Quick Ratio

    The quick ratio is an indicator of a company’s short-term liquidity. The quick ratio measures a company’s ability to meet ...
  3. Black Tuesday

    October 29, 1929, when the DJIA fell 12% - one of the largest one-day drops in stock market history. More than 16 million ...
  4. Black Monday

    October 19, 1987, when the Dow Jones Industrial Average (DJIA) lost almost 22% in a single day. That event marked the beginning ...
  5. Monetary Policy

    Monetary policy is the actions of a central bank, currency board or other regulatory committee that determine the size and ...
  6. Indemnity

    Indemnity is compensation for damages or loss. Indemnity in the legal sense may also refer to an exemption from liability ...
Trading Center