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Federal Estate Tax Credits – Paul Gaulkin CPA

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Below we are going to discuss two tax credits that are available against the federal estate tax. Foreign Death Taxes A foreign death tax credit is provided for United States citizens and residents. The credit applies to property that is subject to both federal and foreign death taxes in order to prevent double taxation. Taxes paid to possessions of the United States are regarded as foreign death taxes according to Code Section 2014. The foreign estate tax credit allowed against … Read more

Basis of Inherited Property – Paul Gaulkin CPA

writing last will

Basis of an inherited capital asset is generally going to be the fair market value of the property on the date of death or alternative valuation date, if elected by the personal representative. With the exception of 2010 transfers electing modified carryover basis, a gain on inherited property is always long term. Step Up Basis A step up in basis occurs when the fair market value is greater than the decedent’s basis. It is important however to understand that the … Read more

Irrevocable Life Insurance Trust Pros & Cons – Paul Gaulkin CPA

a folder that says policy folder

The primary purpose for establishing an irrevocable life insurance trust is to remove life insurance from an estate which in effect helps avoid being subject to estate taxes. If a taxpayer owns an insurance policy, the value of the death benefits paid to the beneficiaries is added to their estate. It is this reason that individuals often transfer the ownership of the policy to their beneficiaries, or a trust created for the purpose of holding title to the insurance contract. … Read more

Bypass Trust Estate Planning Explained – Paul Gaulkin CPA

Document of a will

In estate planning, a trust known as a Bypass Trust is used together with a marital trust in order to pass the maximum amount of money to beneficiaries without having to pay estate tax. In this type of tax planning structure, both spouses are able to use their unified credit to offset estate taxes due. Bypass Trust Planning Basically, the way it works is the marital deduction trust receives all assets left directly to the surviving spouse or for their … Read more

Qualified Personal Residence Trust – Paul Gaulkin CPA

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A qualified personal residence trust gives a taxpayer a straightforward way of removing the value of a personal residence from an individual’s taxable estate. Qualified personal residence trusts are useful in situations where an individual would like to transfer their personal residence to family members at some point in the future. Qualified Personal Residence Trust A QPRT is generally only allowed to hold a personal residence and no other assets. In some cases, there are flexible QPRTs that will allow … Read more

POD Bank Account – Paul Gaulkin CPA

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A payment on death bank account is used to transfer the account upon death to the named beneficiary without having it go through probate. This type of account is usually used for savings, checking, brokerage accounts, and certificates of deposit. It is important to note that this type of titling of property is not available in all state. Community State POD Accounts Taxpayers who live in a community property state need to be aware that finds in a POD account … Read more

Federal Estate Tax Form 706 – Paul Gaulkin CPA

Last Will and Testament

The IRS will assess the federal estate tax upon the transfer of property when the death of an individual occurs. This requires the filing of Form 706 (Estate Tax Return) and a fair market evaluation of all the property owned at the time of death. This can include cash, securities, real estate, insurance, trusts, annuities, business interests, and other assets. Federal Estate Tax Deductions Once the valuation of the gross estate has been established, certain deductions can be taken to … Read more

Benefits of Estate Planning – Paul Gaulkin CPA

Will and trust being signed

The objective of estate planning is to provide individuals with an effective way to control their assets, both during and after death. In terms of how that breaks down, there are generally three objectives to estate planning. The first objective is to provide for the care of family members and the continuation of the lifestyle that they have grown accustomed to. The second objective is to ensure that the people you actually want your assets to be transferred to receive … Read more

Overpayment of Tax by a Fiduciary – Paul Gaulkin CPA


In the event a fiduciary (a trustee, executor, administrator, guardian, and receiver) makes an overpayment of tax to the IRS, the refund is recoverable by the fiduciary or a successor. Claim for Refund A claim for refund from the IRS by the fiduciary should include a statement that shows proof that the fiduciary filed the tax return to which the overpayment applies and that the fiduciary is still acting in that capacity of the estate. The claim for refund is … Read more