1. How does the gross estate differ from a probate estate? What determines whether an item passes to heirs outside the probate process? Are items subject to estate tax that are not subject to income tax? Why or why not? Is a probate estate subject to income tax? Explain your answer.
2. Are gifts subject to an income tax? Why or why not? What constitutes a gift?
3. What is the annual amount that a donor can give to a recipient each year and not have to file a gift tax return? If the donor gives more than this amount, is the donor required to pay a gift tax? Recommend a tax strategy, other than giving only the annual exclusion amount, to minimize the gift tax.