¹The Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) provided for a modified carryover basis regime in 2010; see Sawyers and Whitlock, "Estates, Trusts & Gifts: Post-EGTRRA Analysis and Planning," 32 The Tax Adviser 822 (December 2001).

²Secs. 1014(a)(2) and 2032. Alternative valuation is available only if an estate tax return must be filed and the election causes both the estate's size and the estate tax liability to decline.

³Full relief would ensue if a credit rather than a deduction were allowed, and if the adjustment (either deduction or credit) took into account both state and Federal estate taxes.

⁴The EGTRRA phased out repeal of the itemized deduction limit starting in 2006; see Hegt, "EGTRRA Lowers Rates and Expands Credits, Education Benefits," 32 The Tax Adviser 677 (October 2001).

⁵For this purpose, the estate tax includes the generation-skipping transfer (GST) tax, if applicable.

⁶The IRD deduction in the first year will be larger; the accrued interest existing on the DOD is an additional IRD item.

⁷Edward D. Rollert Residuary Trust, 752 F2d 1128 (6th Cir. 1985).

⁸Rev. Rul. 92-47, 1992-1 CB 198.

⁹Rev. Rul. 78-32, 1978-1 CB 198.

¹⁰Paul R. Kitch, 103 F3d 104 (10th Cir. 1996).

¹¹Rev. Rul. 58-435, 1958-2 CB 370; Rev. Proc. 97-37, IRB 1997-33, 18.

¹²Assets included in the gross estate and passed on to a surviving spouse qualify for the Sec. 2056(a) unlimited estate tax marital deduction.

¹³The EGTRRA reduced the top marginal estate tax rate to 50% in 2002; additional rate reductions occur until the highest rate is reduced to 45% in 2007. The state death tax credit is phased out over a three-year period beginning in 2002, when the credit is reduced by 25%. Additional reductions of 25% occur in 2003 and 2004, with complete repeal in 2005; see Sawyers and Whitlock, note 1 supra.

¹⁴The EGTRRA permanently increased the unified exemption equivalent for gifts to $1 million beginning in 2002 (for estate and GST tax purposes, the exemption equivalent increases to $1 million in 2002 and phases up to $3.5 million in 2009). The rate changes for estate tax purposes also apply for gift tax purposes through 2009. Beginning in 2010, the highest gift tax rate is set at the highest individual income tax rate in effect; see Sawyers and Whitlock, note 1 supra.

¹⁵REG-130477-00 and REG-130481-00 (both dated 1/17/01, corrected 2/21/01); for a discussion, see Weber and Dilley, "Navigating the Maze of the Required Minimum Distribution Rules," 33 The Tax Adviser 118 (February 2002).

¹⁶53% 5 (1 – 47% IRD deduction).

¹⁷Assuming a 10% long-term capital gain rate and a 5% state marginal rate.

¹⁸Id. It is also assumed that either A or B can make full use of the IRD itemized deduction; otherwise, the potential tax savings may be substantially reduced.

¹⁹Specifying in a will that a bequest to charity will not be reduced by a pro-rata share of taxes and expenses will maximize the amount actually received by the charity and the available charitable deduction.

²⁰This is $3.2 million – $633,200 state death tax credit.

²¹This is $1.935 million – $305,000 state death tax credit.