TOP 10 MISTAKES Federal Estate & Gift Tax

# 10 Schedule K - Real Estate Taxes Real Estate Taxes are only deductible if they are a lien at date of death. In Nebraska, real estate taxes become a lien on December 31. See Neb. Rev. Stat. § Real Estate Taxes are deducted on Schedule K, not Schedule J.

# 9 Schedule J – Expenses of Administration Expenses of the Heirs to attend the Decedent’s funeral are not deductible Travel Expenses Hotel Expenses Meals Duplication of Expenses on 1041 and 706 Estimates Necessary for Administration of Estate

# 8 Real Estate Valuation Do not include at assessed value Real Estate must be included at its Fair Market Value Liens against the real estate should be included on Schedule K Personal Property should be separated from Real Property Use an Independent Appraiser Sale of Property may be relevant Sales Expenses not deductible unless necessary to pay debts and expenses of estate or to effectuate distribution

# 7 Prior Gifts Determine if there were any prior gift tax returns filed by the Decedent Obtain the prior gift tax returns Review the prior gift tax returns Determine if there were gifts made by the Decedent that were not reported on a gift tax return Penalties for Line 4 omitted gifts

# 6 Review the Decedent’s Will and Testamentary Documents Trace any property included in the will that is omitted from inventory Determine the proper disposition of the property

# 5 Review the Decedent’s Form 1040 Interest Dividends Real Estate Business Interests Refunds

# 4 Overfunding the Marital Share Reduce Marital Share by the Transmission Expenses Reduce Marital Share by Federal and State Estate Taxes paid from the Marital Share Reduce Marital Share by Debts and Expenses Paid from Marital Share

# 3 Charitable Deductions Bequests to Cemeteries are generally not deductible Bequests to Masonic Groups are generally not deductible Transfers of Personal Property to Charity are only deductible if the Will or Trust Document provide for such disposition

# 2 Tangible Personal Property Provide a list of the Personal Property Include at Fair Market Value Review Insurance Policies and Addendums

# 1 Valuation of Closely-Held Entities Independent Appraisal Business Purpose Agreement Sales Formalities of Entity Interpretation of Facts Interpretation of Law Discounts

Miscellaneous Items Amended Returns Reporting Assets Located After Return Filed Transactions Between Family Members Interrelated Computation Section 6166 Changes Sections 2032A and 2057 Projects Nonfilers

Michele L. Moser Attorney, Estate Tax 1313 Farnam St., STOP 4431-OMA Omaha, NE Phone: Fax: Estate and Gift Tax, Cincinnati Service Center