Federal Income Tax 2 – HW W8

The central concepts learned during the week were estates, trusts, and gift taxes. Other
than the individuals and corporations that file tax returns, entities such as trusts and estates
also take part in filing tax returns. Trusts are created to benefit an individual without providing
them with the principal control of the declaration of faith. Trust is one of the legal requirements
that is mainly used. The assets that are transferred by an individual who is alive into the trust will
not be a section of the personal estate until he or she dies. Three forms of transfer may take place when an individual is still alive. They include the gift of a present interest, the
gift of a future interest, and the uncompleted gift. The new gift is the immediate transfer, while
the future part is the irrevocable transfer. The uncompleted interest gift, on the other hand, is a
revocable transfer of the ability to access wealth in the future.
My experience with the week’s concept was engaging as I was in a better position to
understand the lessons properly. Class questions on gift and estate tax gave an adequate
elaboration on some of the credits that can be offset against a gross estate tax to determine the
net estate taxation in the United States. I had some challenges in understanding what would
happen in situations where there is a unified rate schedule. However, from the questions, I was
able to resonate with the issues and know that the gift and estate tax will be computed based on
their transfers at the point of death.