Estate Tax

Federal estate tax applies to the transfer of property at death. The estate of a person who died is liable for taxes on the estate.

The executor of the estate must file returns for the deceased person. This return is due nine (9) months after the date of death. (IRS can extend the time for any payments due up to 10 years)

IRS Tax Code Reads As Follows: "Most relatively simple estates (cash, publicly traded securities, small amounts of other, easily valued assets and no special deductions or elections or jointly held property) with a total value under $1,000,000 and a date of death in 2002 or 2003 and $1,500,000 and a date of death in 2004 or 2005 do not require the filing of an estate tax return"

The really good news is that Congress has approved a schedule that increases the amount an individual can leave to heirs tax-free to $2 million in 2006-2008 and to $3.5 million in 2009.

Life insurance proceeds are included in the estate only IF the proceeds are received by the estate in any way.

The gross estate includes the value of ALL property belonging to the deceased at the time of death.

The value of the property is based upon fair market value at the time of death.

The taxable estate is the gross estate minus the following:

* Administration and funeral expenses

* Claims against the estate

* All outstanding obligations

* Casualty and theft losses

* Marital deductions

* Charitable deductions

It is highly recommended that you contact a Tax professional to complete the Estate Taxes, especially if you do not have access to the decedent's most recent tax returns. All assets are to be listed on the Estate Tax return. If you are not sure of the assets; IRS can help your tax professional with assets that have been reported on previous returns.

If the estate is large; by all means contact an attorney and or CPA or EA to help you sort through the paper work.

For more information visit the IRS web site at and put in the keyword: estate taxes; or look up Form 706 or Publication 950.

Cassandra Ingraham is a Tax Accountant and Instructor for Basic Tax Classes in the San Francisco Bay Area. During the balance of the year she can be found at providing Formal Introductions to Lenders for Accounts Receivable Funding (Factoring) and Purchase Order Funding.

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