AI Q&A: Comparing Spheres: An Overview of Unique Estate and Gift Tax Laws in California Vs Federal Regulations
See the answer OpenAI GPT-4 gave to: "What unique estate and gift tax laws apply in California, and how do these compare to federal regulations?"
OpenAI’s GPT-4 Answers
California has its own estate and gift tax system which is separate from the federal tax system. Here's what you need to know:
California Estate Tax
California's estate tax was in effect from 2005 through 2009, but in 2010, it was repealed pursuant to an agreement with the federal government. Therefore, California does not currently impose a state-level estate tax, but estates with a significant amount of assets may still be subject to federal estate tax.
California Gift Tax
California does not have a state-level gift tax. However, gifts that are considered taxable gifts under federal law are also subject to California income tax to the extent the gift is comprised of California-source income. This is because California's income tax extends to income earned from sources both inside and outside the state.
Federal Estate and Gift Tax
The federal estate and gift tax is a unified system where an individual's estate and lifetime gifts are combined together to determine whether any tax is owed. In 2021, the federal estate and gift tax exemption amount is $11.7 million per person ($23.4 million for married couples). This means that individuals can pass on up to $11.7 million in assets during their lifetime or at death before the estate tax kicks in. The federal estate and gift tax rate is currently 40%, and this rate applies to any amount above the exemption.
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