At the present time, there are basically two types of state death taxes-state es
ID: 2758390 • Letter: A
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At the present time, there are basically two types of state death taxes-state estate taxes and inheritance taxes. [1] 2. Under current law, state death taxes are a deduction for the entire amount of state death taxes paid for federal estate tax purposes. [1] 3. Decoupling refers to states that have both an inheritance tax and a state estate tax. [1] 4. If a decedent's estate does not have to file a federal estate tax return (Form 706), there is no deduction for state death taxes paid. [1] 5. In many states, beneficiaries of different classes are taxed at different rates. [2] 7. The closest blood relatives of a decedent typically have the lowest state death tax rate and the largest exemption. [2] 7. Real estate transferred at a decedent's death is taxed only by the decedent's state of domicile. [3] 8. Intangible personal property may be subject to death taxation by more than one state. [4] 9. Life insurance proceeds payable to a named beneficiary other than the estate are specifically exempt from state death taxes in some states. [4] 11. A decedent-spouse's one-half interest in community property is exempt from state death taxation in most of the community-property states. [4] Many states have adopted the time frame of 3 months from the date of the decedent's death for filing and paying death taxes. [4] T F 1. A charitable deduction is allowed for the entire value of a bequest to a qualified charity even though the property is not included in the donor's gross estate. [1] T F 2. A charitable deduction will be allowed for the full value of property that passes to a qualified charity as a result of a qualified disclaimer made by a prior beneficiary. [2] T F 3. So that gifts of remainder interests made to charity may qualify for the charitable income, estate, or gift tax deduction, the gift must be in the form of a charitable remainder trust or a pooled-income fund. [3] T F 4. It is now possible to create a charitable remainder trust in combination with a qualified terminable interest property (QTIP) trust in favor of the surviving spouse and to avoid federal estate tax liability entirely. [4] T F 5. When the donor makes a gift of a remainder interest in a CRT, the donor escapes all gift taxation as a result of the transfer. [5] T F 6. With a charitable remainder annuity trust, one or more noncharitable income beneficiaries receive a fixed percentage of not less than 5 percent of the net fair market value of the trust assets as revalued annually. [5] T F 7. Under current tax law, the value of a remainder interest passing to charity in a CRT must be at least 10 percent of the value of the property transferred to the trust. [5] T F 8. Pooled-income funds are used primarily by wealthy donors making sizable charitable contributions so that more income will be generated within the fund. [5] T F 9. Charitable lead trusts are structured so that one or more noncharitable beneficiaries receive the remainder interest in the trust when it terminates. [5] T F 10. One of the disadvantages of the charitable gift annuity is that it is an arrangement requiring a trust agreement and has ongoing trustee fees. [6] T F 11. Once a donor makes a contribution to a community foundation, the donor's involvement ends. [6] T F 12. A recognized advantage of private foundations is that they are subject to few and simple taxation rules. [6] T F 13. Often donors establishing a private foundation intend the foundation to be a way of involving future family generations in social and philanthropic endeavors. [6] T F 14. Private foundations provide lower annual charitable deduction percentages than are generally allowed for charitable contributions to public charities. [6]Explanation / Answer
Question 1: true
As per IRS, there are two types of death taxes. They are:
Estate taxes are levied on the right to transfer property and other assets to the heirs after the demise. It can be charged by both state and federal government.
Inheritance taxes are levied on the right to receive property or other assets of the demised person. It is charged by state government only.
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