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wm030303
wm030303, Enrolled Agent
Category: Tax
Satisfied Customers: 112
Experience:  I am both a CPA and EA with over 30 years of experience in solving tax related issues.
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Before the Tax Reform Act of 1976 was passed, the exemptions

Customer Question

Before the Tax Reform Act of 1976 was passed, the exemptions were $60,000 death-time and the $30,000 lifetime. That Act combined the estate and gift taxes into a single unified tax that could be reduced by a unified credit which replaced the two exemptions.

The current estate tax form 706 (from year 2010 here) has a related portion that reads as follows:
2010 FORM 706 Part 2—Tax Computation asks on line 4 for you to state total gifts as follows:
Adjusted taxable gifts (total taxable gifts (within meaning of section 2503) made by decedent after Dec 31, 1976 other than gifts that are includible in deceased gross estate (sec 2001(b))).

Does this mean that any gifts totaling less than $30,000 that were gifted before 1976 are not listed in the estate tax documents and not included in the estate tax calculations currently? Does that mean that gifts made before 1976 fall under the old law of the $30,000 lifetime exemption and gifts made after 1976 fall under the new law and are included in the unified credit? If a gift of $50,000 was given before 1976 and the man died in 1984, then would only $20,000 of the gift be used in estate tax calculations , while the first $30,000 would be ignored because it fell under the old law where the gift and estate taxes were separated, not united?
Submitted: 3 years ago.
Category: Tax
Expert:  wm030303 replied 3 years ago.

wm030303 :

Hello and welcome to Just Answer. I'll do my best to sort through all of this for you.

wm030303 :

First of all I'm not sure if the IRS has a record of all the tax returns dating back to the 1970's. As fr as I know they only go back about 6 years.

wm030303 :

If in this example the man died in 1984 then his estate would have been taxed on the $20,000 back in 1984.

wm030303 :

I'm going to opt out of this one though, because there have been many changes to the law since 1976. Maybe one of the estate attorney's may be more knowledgable in this area.

JACUSTOMER-03arevjp- :

Thanks for trying. It is late in the day to be asking. Maybe someone out there will be familiar with the before and after changes and see the question in the morn.

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