Gift and Estate Valuations - 2023
Basis Transfers
According to the IRS, your basis in gifted property is carried over from the donor; while your basis in inherited property is stepped up to fair market value
Fair Market Value of Transferred Wealth
The IRS requires a determination of Fair Market Value (FMV) for property received as a gift or inheritance. The FMV can be determined informally, i.e. without an appraisal but you are advised to substantially conform to the level of expertise provided by an expert appraiser.
FMV of gift allowed to be calculated in a less formal manner than an accredited appraisal.
In calculating the donor's basis on the gifted property is important to include improvements to the property and diminution
Estate Tax Formula
(+) Gross Estate
(-) Deductions, claims, expenses, taxes
(-) Casualty and theft losses
(-) Charitable bequests
(-) Marital deduction
(=) Taxable Estate
(+) Taxable gifts made after 1976
(=) Total Taxable Transfers
(x) Tax Rate
(=) Tentative Estate Tax
(-) Gift taxes paid on post-1976 gifts
(=) Gross Estate Tax
(-) Applicable credit amount
(-) Other Credits
= ESTATE TAX LIABILITY