Gift of $15,000
On June 11, 1992, the accountants requested an extension for filing the estate tax return (IRS Form 4768) that was originally due on June 15, 1992. The reasons given on the $175,000 version were:
From IRS Form 4768, Part II Extension of time to file
I was lucky; I was forewarned. Innocent Jean Nader had me sent me a copy of Edward White's 1992.05.04 letter ("If we have knowledge of a gift to Tony of $15,000, we must report it. Tony is going to have to answer that question before we can be satisfied. If he claims he did not receive the money, he will have to supply us with an affidavit to that effect.."). I called the CPA firm and asked the receptionist for a copy of the 1988 gift tax for Jean O'Connell and the receptionist sent me a copy. So after receiving Edward White's letter of July 16, 1992 ("At any time prior to your mother's death did you receive in any one or more calendar years, gifts from her totaling more than $10,000.00? If you did, please list the dates and amounts of each gift."), I had a copy to send him. There is no reason that I should have had a copy of the 1988 gift tax return prepared by Joanne Barnes for Jean O'Connell. I could never have convinced innocent Jean Nader that it was not my fault if I could not have gotten a copy.
1. The decedent was a part owner of a tract of ground the value of which is to be determined by an appraisal in progress. The enclosed payment is based on the maximum value for the property and will be changed.
2. The estate does not at this date possess full data for certain gifts and debts of the estate and other needed information."
1992.05.04 (Edward White to Jean Nader)
"Enclosed is the form for appealing the tax assessment of the Accotink property. On page 2, it states that there is a June 1 deadline. I do not think we can make a claim of a lesser value on the estate tax return if we do not file an appeal with the county. To fail do appeal it would hurt our argument with the IRS.
The summary of the estate tax computation and the interplay of the gift tax is as follows: 1. In computing the estate tax, the gross estate (which includes anything which passes due to death whether in the probate estate or not) is figured, the debts subtracted and the "taxable estate" is ascertained.
2. The tax is then computed on the taxable estate. From this figure is subtracted a "unified credit" of $192,800 (equivalent to a taxable estate of $600,000).
3. Lifetime gifts in excess of $10,000 to any one individual are taxable at the estate/gift tax rates. Each year the donor should have filed a gift tax return, though no Lax is due unless the entire $192,800 credit has been used in making the gifts.
4. Each gift over $10,000 uses a portion of the unified credit, thus reducing the amount of that credit available to apply to the estate tax.
In our case the lifetime gifts used up $9784.00 of the available credit. A list of the gifts is enclosed. Returns for 1989 and 1991 must be filed. As fiduciaries we must certify to the IRS that the return is true and correct. We have personal liability in that regard. If we have knowledge of a gift to Tony of $15,000, we must report it. Tony is going to have to answer that question before we can be satisfied. If he claims he did not receive the money, he will have to supply us with an affidavit to that effect.
As far as the management of an estate undergoing the probate process is concerned, the Executors are entitled to some latitude within the confines of their fiduciary duty. The decisions about the estate are theirs.
My personal operational mode in these matters is to keep the heirs fully supplied with the paperwork of the estate, and consult with them fully as to strategic and long range issues, such as the valuation of property in the Accotink situation. The day to day matters and the justification for tactical positions taken such as the contents of forms and accountings are the prerogative of the Executors and subject to the scrutiny and approval of the Commissioner of Accounts or the taxing authorities only. With regard to the filing of the income tax return, my file indicates that I received a fax copy of the K-1 from the Harold O'Connell Trust on April 9, 1992, only six days before the tax return was due.
Sincerely, Edward J. White"
1992.06.15 Original due date for estate tax return (IRS Form 760)
1992.07.16 (Edward White to Anthony O'Connell, copy to Jean Nader and E. A. Prichard)
"In order that I might file an accurate estate tax return, I need to know the following:
At any time prior to your mother's death did you receive in any one or more calendar years, gifts from her totaling more than $10,000.00?
If you did, please list the dates and amounts of each gift.
If you did not, let me know.
Sincerely, Edward J. White"
to Edward White) (Copies to Jean Nader and Edgar Prichard)
"I received one and only one gift from my mother in excess of $10,000.00. As shown on her enclosed Form 709 for 1988, I received $15,000.00 on April 22, 1988.
Please let me know if you need any other information.
Yours truly, Anthony
1992.07.20 (Edward White to Anthony O'Connell)
"Thank you very much for sending a copy of the 1988 gift tax return. I could tell from the 1990 return that a gift had been made to someone, but I never had a copy of the 1988 return.
Your assistance has been most helpful.
As soon as we can arrive at a final figure for Accotink, we should be able to file the estate tax return."