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TOP 10 MISTAKES

TOP 10 MISTAKES. Federal Estate & Gift Tax. # 10. Schedule K - Real Estate Taxes Real Estate Taxes are only deductible if they are a lien at date of death. In Nebraska, real estate taxes become a lien on December 31. See Neb. Rev. Stat. § 77-203.

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TOP 10 MISTAKES

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  1. TOP 10 MISTAKES Federal Estate & Gift Tax

  2. # 10 Schedule K - Real Estate Taxes • Real Estate Taxes are only deductible if they are a lien at date of death. • In Nebraska, real estate taxes become a lien on December 31. See Neb. Rev. Stat. § 77-203. • Real Estate Taxes are deducted on Schedule K, not Schedule J.

  3. # 9 Schedule J – Expenses of Administration • Expenses of the Heirs to attend the Decedent’s funeral are not deductible • Travel Expenses • Hotel Expenses • Meals • Duplication of Expenses on 1041 and 706 • Estimates • Necessary for Administration of Estate

  4. # 8 Real Estate Valuation • Do not include at assessed value • Real Estate must be included at its Fair Market Value • Liens against the real estate should be included on Schedule K • Personal Property should be separated from Real Property • Use an Independent Appraiser • Sale of Property may be relevant • Sales Expenses not deductible unless necessary to pay debts and expenses of estate or to effectuate distribution

  5. # 7 Prior Gifts • Determine if there were any prior gift tax returns filed by the Decedent • Obtain the prior gift tax returns • Review the prior gift tax returns • Determine if there were gifts made by the Decedent that were not reported on a gift tax return • Penalties for Line 4 omitted gifts

  6. # 6 Review the Decedent’s Will and Testamentary Documents • Trace any property included in the will that is omitted from inventory • Determine the proper disposition of the property

  7. # 5 Review the Decedent’s Form 1040 • Interest • Dividends • Real Estate • Business Interests • Refunds

  8. # 4 Overfunding the Marital Share • Reduce Marital Share by the Transmission Expenses • Reduce Marital Share by Federal and State Estate Taxes paid from the Marital Share • Reduce Marital Share by Debts and Expenses Paid from Marital Share

  9. # 3 Charitable Deductions • Bequests to Cemeteries are generally not deductible • Bequests to Masonic Groups are generally not deductible • Transfers of Personal Property to Charity are only deductible if the Will or Trust Document provide for such disposition

  10. # 2 Tangible Personal Property • Provide a list of the Personal Property • Include at Fair Market Value • Review Insurance Policies and Addendums

  11. # 1 Valuation of Closely-Held Entities • Independent Appraisal • Business Purpose • Agreement • Sales • Formalities of Entity • Interpretation of Facts • Interpretation of Law • Discounts

  12. Miscellaneous Items • Amended Returns • Reporting Assets Located After Return Filed • Transactions Between Family Members • Interrelated Computation • Section 6166 Changes • Sections 2032A and 2057 Projects • Nonfilers

  13. Michele L. MoserAttorney, Estate Tax • 1313 Farnam St., STOP 4431-OMA Omaha, NE 68102-1881 • Phone: 402-221-3779 • Fax: 402-221-3616 • Estate and Gift Tax, Cincinnati Service Center 1-866-699-4083

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