#

1014

IRC section.  Basis of  property acquired from a decedent.

1040

IRS Form for individual income tax returns.

1041

IRS Form for trust income tax returns.

1065

IRA form used by partnerships to report earnings.

121

IRC section.  Exclusion of gain from sale of principal residence.

125 of Estate Planning

The idea of where money should be spent from first when alternatives exist.  Typically money spent 1st from Survivor’s Trust, 2nd from Marital Trust, and lastly from the Family Trust.

13101

California Probate Code section.  Real property; inventory and appraisal.

15200

California Probate Code Section.  Details how a trust can be created.

16062

California Probate Code Section. 

Requires trustee account to beneficiaries on an annual basis.

1P

First Party.

20111

California Probate Code Section.

Absent a proration clause, this section of the probate code states that tax will be paid in proportion to value of property received.

2031

IRC section. 

Deals with valuation of decedent’s estate for estate tax purposes.

Reads as follows:

(a) General

The value of the gross estate of the decedent shall be determined by including to the extent provided for in this part, the value at the time of his death of all property, real or personal, tangible or intangible, wherever situated.

(b) Valuation of unlisted stock and securities

In the case of stock and securities of a corporation the value of which, by reason of their not being listed on an exchange and by reason of the absence of sales thereof, cannot be determined with reference to bid and asked prices or with reference to sales prices, the value thereof shall be determined by taking into consideration, in addition to all other factors, the value of stock or securities of corporations engaged in the same or a similar line of business which are listed on an exchange.

(c) Estate tax with respect to land subject to a qualified conservation easement

(1) In general

If the executor makes the election described in paragraph (6), then, except as otherwise provided in this subsection, there shall be excluded from the gross estate the lesser of—

(A) the applicable percentage of the value of land subject to a qualified conservation easement, reduced by the amount of any deduction under section 2055 (f) with respect to such land, or

(B) the exclusion limitation.

(2) Applicable percentage

For purposes of paragraph (1), the term “applicable percentage” means 40 percent reduced (but not below zero) by 2 percentage points for each percentage point (or fraction thereof) by which the value of the qualified conservation easement is less than 30 percent of the value of the land [1]  (determined without regard to the value of such easement and reduced by the value of any retained development right (as defined in paragraph (5)). The values taken into account under the preceding sentence shall be such values as of the date of the contribution referred to in paragraph (8)(B).

(3) Exclusion limitation

For purposes of paragraph (1), the exclusion limitation is the limitation determined in accordance with the following table:

 In the case of estates of The exclusion   decedents dying during: limitation is: 1998 $100,000   1999 $200,000   2000 $300,000   2001 $400,000   2002 or thereafter $500,000.

(4) Treatment of certain indebtedness

(A) In general

The exclusion provided in paragraph (1) shall not apply to the extent that the land is debt-financed property.

(B) Definitions

For purposes of this paragraph—

(i) Debt-financed property The term “debt-financed property” means any property with respect to which there is an acquisition indebtedness (as defined in clause (ii)) on the date of the decedent’s death.

(ii) Acquisition indebtedness The term “acquisition indebtedness” means, with respect to debt-financed property, the unpaid amount of—

(I) the indebtedness incurred by the donor in acquiring such property,

(II) the indebtedness incurred before the acquisition of such property if such indebtedness would not have been incurred but for such acquisition,

(III) the indebtedness incurred after the acquisition of such property if such indebtedness would not have been incurred but for such acquisition and the incurrence of such indebtedness was reasonably foreseeable at the time of such acquisition, and

(IV) the extension, renewal, or refinancing of an acquisition indebtedness.

(5) Treatment of retained development right

(A) In general

Paragraph (1) shall not apply to the value of any development right retained by the donor in the conveyance of a qualified conservation easement.

(B) Termination of retained development right

If every person in being who has an interest (whether or not in possession) in the land executes an agreement to extinguish permanently some or all of any development rights (as defined in subparagraph (D)) retained by the donor on or before the date for filing the return of the tax imposed by section 2001, then any tax imposed by section 2001 shall be reduced accordingly. Such agreement shall be filed with the return of the tax imposed by section 2001. The agreement shall be in such form as the Secretary shall prescribe.

(C) Additional tax

Any failure to implement the agreement described in subparagraph (B) not later than the earlier of—

(i) the date which is 2 years after the date of the decedent’s death, or

(ii) the date of the sale of such land subject to the qualified conservation easement,

shall result in the imposition of an additional tax in the amount of the tax which would have been due on the retained development rights subject to such agreement. Such additional tax shall be due and payable on the last day of the 6th month following such date.

(D) Development right defined

For purposes of this paragraph, the term “development right” means any right to use the land subject to the qualified conservation easement in which such right is retained for any commercial purpose which is not subordinate to and directly supportive of the use of such land as a farm for farming purposes (within the meaning of section 2032A (e)(5)).

(6) Election

The election under this subsection shall be made on or before the due date (including extensions) for filing the return of tax imposed by section 2001 and shall be made on such return. Such an election, once made, shall be irrevocable.

(7) Calculation of estate tax due

An executor making the election described in paragraph (6) shall, for purposes of calculating the amount of tax imposed by section 2001, include the value of any development right (as defined in paragraph (5)) retained by the donor in the conveyance of such qualified conservation easement. The computation of tax on any retained development right prescribed in this paragraph shall be done in such manner and on such forms as the Secretary shall prescribe.

(8) Definitions

For purposes of this subsection—

(A) Land subject to a qualified conservation easement

The term “land subject to a qualified conservation easement” means land—

(i) which is located in the United States or any possession of the United States,

(ii) which was owned by the decedent or a member of the decedent’s family at all times during the 3-year period ending on the date of the decedent’s death, and

(iii) with respect to which a qualified conservation easement has been made by an individual described in subparagraph (C), as of the date of the election described in paragraph (6).

(B) Qualified conservation easement

The term “qualified conservation easement” means a qualified conservation contribution (as defined in section 170(h)(1)) of a qualified real property interest (as defined in section 170 (h)(2)(C)), except that clause (iv) of section 170 (h)(4)(A) shall not apply, and the restriction on the use of such interest described in section 170 (h)(2)(C) shall include a prohibition on more than a de minimis use for a commercial recreational activity.

(C) Individual described

An individual is described in this subparagraph if such individual is—

(i) the decedent,

(ii) a member of the decedent’s family,

(iii) the executor of the decedent’s estate, or

(iv) the trustee of a trust the corpus of which includes the land to be subject to the qualified conservation easement.

(D) Member of family

The term “member of the decedent’s family” means any member of the family (as defined in section 2032A(e)(2)) of the decedent.

(9) Treatment of easements granted after death

In any case in which the qualified conservation easement is granted after the date of the decedent’s death and on or before the due date (including extensions) for filing the return of tax imposed by section 2001, the deduction under section 2055 (f) with respect to such easement shall be allowed to the estate but only if no charitable deduction is allowed under chapter 1 to any person with respect to the grant of such easement.

(10) Application of this section to interests in partnerships, corporations, and trusts

This section shall apply to an interest in a partnership, corporation, or trust if at least 30 percent of the entity is owned (directly or indirectly) by the decedent, as determined under the rules described in section 2057 (e)(3).

(d) Cross reference

For executor’s right to be furnished on request a statement regarding any valuation made by the Secretary within the gross estate, see section 7517.

2031(a)

IRC section. 

Property included in a decedent’s gross estate is generally valued as of the decedent’s date of death.

2031(b)

IRC section. 

For unlisted stocks and securities, the value is determined by taking into account, in addition to all other factors, the value of publicly traded stocks or securities of corporations engaged in the same or similar line of business.

2032(a)

IRC section.

If certain requirements are met, executor may instead elect to value all property in the gross estate as of six months after the decedent’s date of death, or date of disposition, whichever occurs first.

2032A

IRC section. 

Real property used in a farm, trade, or business may be eligible for a reduced “special use” valuation, and not on highest and best use.

2033

IRC section.  Defines gross estate.

2035

IRC section. 

Certain types of gifts made within 3 years of death are part of the estate.

2036

IRC section.  Transfers with retained life estates of possession, use or income.

2037

IRC section.  Transfers taking effect at death with T’or retaining reversion interest. 

2038

IRC section.  Revocable transfers.

2039

IRC section.  Annuities.

2040

IRC section.  Joint Interests.

2041

IRC section.   Power of Appointment.

2042

IRC section.  Life insurance proceeds.

2043

IRC section.  Transfers for Insufficient Consideration.

2044

IRC section.  Certain property for which marital deduction was previously allowed.

21110

California Probate Code Section. 

Transferee’s death; taking by representation; contrary intent in instrument.

2502(c)

IRC section.  Donor has primary responsibility for paying gift tax.

2503

IRC section.  Taxable gifts.

2503(b)

IRC section.  Annual Exclusion Gifts.

2503(c)

IRC section.  Minor’s trust.

2513

IRC section.  Split-gift election.

2515

IRC section.  Payment of generation-skipping transfer tax.

2516

IRC section.  Transfer incident to divorce.

2519 Transfers

For purposes of this chapter and chapter 11 of the IRS code, any disposition of all or part of a qualifying income interest for life in any property to which this section applies shall be treated as a transfer of all interests in such property other than the qualifying income interest.

2522

IRC section.  Charitable deduction.

2523

IRC section.  Marital deduction.

2701

IRC section.

Special valuation rules in case of transfers of certain interests in corporations or partnerships.

2702

IRC section.  GRATs.

303

IRC section that allows capital gains treatment when could be used to pay certain tax obligations.

338(h)

IRC section.  Certain stock purchases treated as asset acquisitions.

351

Holding Company Rules.

3P

Third Party.

401(k)

Qualified retirement accounts.  An employer-sponsored qualified retirement plan that allows employee-participants to contribute a portion of their pay to their own retirement accounts free of withholding for income taxes.

403(b)

Qualified retirement accounts.

457 Plan

A qualified retirement plan for state and local government employees.

4768

IRS Form.  Request for extension of time to pay gift tax.

5 or 5 Power

The 5 by 5 power is the authority granted the beneficiary of a trust to annually withdraw $5000 or 5% of the assets of the trust.

529 Account

A 529 plan is a tax-advantaged investment vehicle in the United States designed to encourage saving for the future higher education expenses of a designated beneficiary.  It’s name comes from section 529 of the Internal Revenue Code.

529 Plan

See 529 Account.

5150

Section of California’s Welfare and Institutions code dealing with involuntary commitments.

6161

IRC section.

6166

IRC section.  Tax provision allowing an election to pay tax over time.

6185

California Bus. & P. C.

Regarding the appointment of a practice administrator for deceased or disbarred attorney.

678 Trust

IRC section 678 Beneficiary Controlled Trust.

691

IRC section. 

Re income in respect of a decedent (IRD) consists of amounts earned before death but not received until after death.

706

Federal Estate Tax Return From.  Due before 9 months after death of decedent; 6 month extension available.

709

IRS Form.  Gift Tax Return.

721

IRC section.  Non-recognition of gain or loss on contribution.

7520

IRC section. 

Fair market value of a noncommercial annuity, interest for life or a term of years, remainder, or reversionary interest is the present value of the interest as determined using the valuation tables prescribed under this section.

850

California Probate Code Section. 

Permits petition of court to add property to a trust.  Estate of Heggstad, 16 Cal.App.4th 943 (1993) case, if evidence can be shown of decedent’s intent to put property in estate, court may order it so.  Always get clients to create this evidence by signing document reflecting their intent that everything is to be in the trust.