Taxation of Estates and Gifts

Applicable Credit Amount

Every person has a lifetime application credit amount (made to effect the applicable exclusion amount.) It is $4,505,800 (~40% of the AEA) in 2019.

  • Read problems carefully! They may have an older year and thus a lower credit amount.

Every gift over the annual exclusion reduces the applicable credit amount. Then the same remaining applicable credit amount is applied against the estate tax at death.

This credit also includes a deceased spouse's credit from the deceased spousal unused exclusion amount.