The tax is then reduced by the available unified credit. The value of some operating business interests or farms may be reduced for estates that qualify.Īfter the net amount is computed, the value of lifetime taxable gifts (beginning with gifts made in 1977) is added to this number and the tax is computed. Once you have accounted for the Gross Estate, certain deductions (and in special circumstances, reductions to value) are allowed in arriving at your 'Taxable Estate.' These deductions may include mortgages and other debts, estate administration expenses, property that passes to surviving spouses and qualified charities.

The total of all of these items is your 'Gross Estate.' The includible property may consist of cash and securities, real estate, insurance, trusts, annuities, business interests and other assets. 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. It consists of an accounting of everything you own or have certain interests in at the date of death ( Refer to Form 706 PDF). The Estate Tax is a tax on your right to transfer property at your death.

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