In the United States, Estate tax or inheritance tax is imposed only on the "taxable estate” of the deceased, which is generally less than the value of the full estate or gross estate, reduced by various deductions, including the Unlimited Marital Deduction available for property passing to a spouse. It is the net value of a deceased person's assets reduced by liabilities and diminished by the prescribed tax-deductible portion of assets left behind by the deceased, which is subject to estate tax.
For estate tax purpose from the value of the ‘gross estate’ certain deductions are made to arrive at the value of the 'taxable estate'. Such deductions include the following though not confined to the same:
- Property left to the surviving spouse
- Gift taxes already paid by the deceased spouse on retained interests of non qualified gifts
- Claims against the estate, funeral expenses and administrative expenses
- Certain charitable contributions
- Inheritance or estate tax paid to any state or the District of Columbia since 2005
Due to unlimited marital deduction available any amount of property can pass on from one spouse to another without suffering estate tax if the recipient spouse is a US citizen.
(More: http://www.taxalmanac.org/index.php/Internal_Revenue_Code:Sec._2106._Taxable_estate
http://www.law.cornell.edu/uscode/26/usc_sec_26_00002106----000-.html)
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