Forums Support Library EPT – Estate Planning Tools Tax on a Net Net Gift


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    • Kathleen Reynolds
      Post count: 428

      View Sample Report

      A Net Gift is when the donee agrees to pay the donor’s gift tax. For a Net Net Gift, the donee also agrees to pay the estate tax that is calculated under §2035(b) – when a donor dies within 3 years of the gift, the gift tax is included in the estate.

      The benefits of a Net Net Gift are tied to the size of the gift and the age of the donor. The older the donee the higher the probability that the donor will die within three years. The age of the donor is used to calculate a reversion factor.

      The estate tax liability, §2035(b), is a result of a circular calculation in which each dollar of estate tax lowers the gift, which in turn lowers the gift tax. The iterations are complete once the value of the gift before the iteration is equal to the value of the gift after the iteration (thus no values converge).

      Net Net Gift Screenshot

      Entering Data

      • Date of Gift Enter the date of the gift in MM/YYYY format. This is used to automatically populate the §7520 Rate.  See Transition Period Notes
      • §7520 Rate If the date of the gift occurs when a published §7520 rate is available, this field will auto-populate once you change the date of the gift. If the date of the gift is in the future, the user should enter a reasonable rate to be used.
      • Taxable Gift (Before Tax) Enter the taxable gift prior to any gift tax and/or §2035(b) tax.
      • Prior Taxable Gifts Enter the total amount of prior taxable gifts. If the total gifts are in excess of $500,000, it is advised to use the Prior Gifts model to determine the Credit used.
      • Unified Credit Used Enter the Unified Credit used on the prior taxable gifts. If a computer icon appears, clicking on this icon will result in the maximum Credit used based on the taxable gifts with regards to the date of the gift. You can use the Prior Gifts model to enter year by year gifts to determine the credit used.
      • Spousal Unused Exclusion If the spouse died after 2010, enter the remaining Deceased Spousal Unused Exclusion. If a computer icon appears, clicking on it will return the highest value possible based off the date of the gift. Also, if sunsetting is selected and the year is a sunset year, its possible to have a DSUE higher than the date of gift’s federal exclusion. So, use caution when entering this value.
      • Age of Donor Enter the age of the donor.
      • Inflation Rate Enter the inflation rate to be used for the federal exclusion for years that are not published.
      • Sunset in 2026? The estate tax exclusion is set to sunset in 2026. Selecting ‘No’ will result in the federal exclusion growing by the inflation rate with the current exclusion as the base.
      • Mortality Table This input only appears when the user can select between two mortality tables (transition period). The last time this happened was 5/2009.


      The summary report shows a column for no net gift, and one for a Net Net Gift.

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