Federal Estate Tax

Florida Federal Estate Tax Return Attorneys

Heling Clients & Their Families Navigate the Law

The federal estate tax is a tax on your right to transfer property after you pass away. It consists of accounting for everything you own and certain interests you had before your death. The fair market value of these items is used, not necessarily what you paid for them or what their values were when you acquired them. The total of all of these items is your "gross estate." The includible property can consist of cash and securities, real estate, insurance, trusts, annuities, business interests, and other assets.

Once you have accounted for the gross estate, certain deductions (and in special circumstances, reductions to value) are applied to determine your "taxable estate." These deductions can include:

  • Mortgages and other debts
  • Estate administration expenses
  • Property that passes to surviving spouses and qualified charities
  • The value of certain operating business interests or farms can be reduced for eligible estates

Most relatively simple estates do not require the filing of an estate tax return. A filing is required for estates with combined gross assets and prior taxable gifts exceeding $11.4 million.

FAQ: Federal Estate Tax

Question #1: What is included in the estate?

A: The "gross estate" can include cash and securities, real estate, insurance, trusts, annuities, business interests, and other assets. Keep in mind that the gross estate will likely include non-probate and probate property.

Question #2: If I own a 1/2 interest in a farm, building, or business with a sibling or friend, what will be included?

A: Depending on how your 1/2 interest is held and treated under state law and how it was acquired, you would probably only include 1/2 of its value in your gross estate. However, many other factors influence this answer, so you would need to consult with our knowledgeable attorneys to make that determination.

Question #3: What is excluded from the estate?

A: Generally, the gross estate does not include property owned solely by the decedent's spouse or other individuals. Lifetime gifts that are complete (no powers or other control over the gifts are retained) are not included in the gross estate. However, taxable gifts are used in the computation of the estate tax. Life estates given to the decedent by others in which the decedent has no further control or power at the date of death are not included. The value of life insurance, if it was neither owned by nor payable to the decedent, is excluded from the gross estate.

Question #4: What deductions are available to reduce the federal estate tax?

A: The Marital Deduction can be applied to all of the property that is included in the gross estate and passes to the surviving spouse. The property must pass "outright." In some cases, certain life estates also qualify for the marital deduction. If the decedent leaves property to a qualifying charity, it is deductible from the gross estate. Mortgages and debt, the administration expenses of the estate, and losses during estate administration can also be deducted to reduce the federal estate tax.

Question #5: What other information do I need to include with the federal estate tax return?

A: Copies of the death certificate, the decedent's will and/or relevant trusts, appraisals, and any relevant documents regarding litigation involving the estate. You also need to include documentation of any unusual items shown on the return, such as partially included assets, losses, near date of death transfers, and others.

Question #6: What is “fair market value?"

A: Under IRS Code Regulation §20.2031-1, fair market value is defined as “the price at which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of relevant facts. The fair market value of a particular item of property includible in the decedent's gross estate is not to be determined by a forced sale price. Nor is the fair market value of an item of property to be determined by the sale price of the item in a market other than that in which such item is most commonly sold to the public, taking into account the location of the item wherever appropriate."

Question #7: Can I request an extension on a federal estate tax return?

A: The estate's representative may request an extension of time to file for up to six months from the due date of the return. However, the correct amount of tax is still due by the due date and interest is accrued on any amounts still owed by the due date that are not paid at that time.

Question #8: When will I receive the estate tax closing letter?

A: It varies. When a return is accepted as filed and contains no other errors or special circumstances, it can take about 9-12 months after the return is filed to receive the closing letter. Returns that are selected for examination or reviewed for statistical purposes will take longer.

Question #9: What happens if I sell property that I have inherited?

A: The sale of property you inherit is generally considered the sale of a capital asset and can be subject to capital gains treatment. However, IRC §1014 states that the basis of property acquired from a decedent is its fair market value at the time of their death, so there is usually little or no gain to account for if the sale occurs soon after the date of death.

Question #10: What if I disagree with the examination proposals?

A: You have the right to appeal if you disagree with any proposals made by the IRS.

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At Adrian Philip Thomas, P.A., we know that estate, trust, and probate are ever-developing areas of the law in Florida. That is why we are committed to using our breadth of experience and varied backgrounds to deliver outstanding legal representation for clients across the state of Florida. Our success is measured by the satisfaction of our clients, so please do not hesitate to get in touch with us to discuss your situation today.

Give us a call at (800) 776-3103 or contact us online to set up a complimentary consultation with one of our friendly and compassionate legal professionals.

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