Estate Taxes

ASSIGNMENT #4: ESTATE TAX

Introduction

This paper is about one of the wealth transfer tax which is primarily associated with death or estate tax. A gift tax is another wealth transfer tax that applies if a person transfers property while (he/she is) alive. Both the gift tax and the estate tax are part of the unified transfer tax system that subjects gratuitous transfers of property between persons to taxation. In other words, though the two are identified as gift tax and estate tax, these taxes actually are components of the same unified transfer tax system (Anderson & Pope, 2012). Therefore, at least from this perspective, the two taxes are almost inseparable. That is why I am going to answer some of the following questions in the light of both gift tax and estate tax.

This paper is actually based on responses to the six questions regarding a hypothetical wealthy couple who has hired me to advise them on protecting their estate from taxes upon death. The same couple is also assumed to own a farm and several businesses that they would like to pass on to their three (3) children. For the sake of simplicity, I am going to answer the six questions in the following order:

Firstly, based on my research related to estate taxes and the current level of the interest of IRS to estate tax, I will assess how this information may factor into my advice and the level of aggressiveness with estate tax minimization and planning for the clients. I will also try to provide support for my position. Secondly, based on the review of the recent or current legislative proposals related to estate taxes, I will evaluate the proposal I believe to be most viable. I will also try to indicate how such a change may be implemented into the tax law. I will try to provide support for the rationale as well. Thirdly, I will try to analyze the impact of estate taxes on a taxpayer’s ability to transfer wealth to their children and tax planning tools used to minimize estate taxes. I will also...