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Note: This web page will be completed in stages.
For each tax form, the IRS is required to provide an estimate of the
time that is required for the taxpayer to keep records, to read the instructions,
to prepare the form and to prepare it for mailing to the IRS. It appears
that the IRS bases their estimates on minimum amount of time required for
each part of the process and that the taxpayer is a tax professional. Here
are their estimates for the average filing time for each part of the process
of preparing the estate tax return.These estimates are the sum of the separate
estimates for each of the various schedules. Thus, these amounts presume
that the return would involve every supporting schedule that could be required
with the estate tax return.
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| Recordkeeping | 9 hours, 40 minutes |
| Reading the instructions | 6 hours, 44 minutes |
| Preparing the form | 11 hours, 14 minutes |
| Copying, collating and mailing | 8 hours, 45 minutes |
| Total time | 36 hours, 23 minutes |
The IRS instructions for form 709 provide extensive and detailed information
about the procedures for filing an estate tax return.
For a copy of the following IRS publications, visit their web site at
http://www.irs.ustreas.gov/prod/forms_pubs/index.html
Link on the section for IRS publications and select
* Publication 950 - Introduction to Estate & Gift Taxes
* Publication 561 - Determining The Value of Donated Property
Taxpayer's Relief Act of 1997 - Statement of the Managers
Part V - Estate, Gift and Generation Skipping
Tax Provisions
Part XIII - Estate, Gift and Trust Simplification
Provisions
When you are making a transfer of property that can't be valued by reference to an auction market like publicaly listed stocks, the most critical element is the valuation appraisal. A well qualified appraisal will protect you from substantial penalties down the road and will make it hard for the IRS to dispute the value placed on your property. On behalf of a client, I recently spent quite a bit of time helping the client to select an appraiser. About two months before that, I wrote an article for a technical journal about business valuation software. As a result of the research I did on the subject of valuations, I concluded that the reputation of the appraiser is far more important than the software.
With the software I still have, I could compute the value of a business at least 20 different ways. But I won't and if I would, it would be a mistake for anyone to hire me for that purpose. Why? Because I have no experience or relevant credentials. Being a CPA doesn't mean that I'm qualified to put a value on a business. The "secret" in getting an appraisal is to get someone with a reputation that will make it impossible for the IRS to convince a judge that your appraiser wasn't qualified and didn't know what he or she was doing. You want your appraiser to be so well qualified that it will make their appraiser look like an amateur by comparison.
How did I make the choice for my client? I called about a dozen estate planning lawyers in the area and asked for recommendations. Then I called the five who were mentioned the most and asked for a professional bio and a sample appraisal report. Then we interviewed three of the five. Then I suggested the client hire the one with the largest firm that did the most appraisals. And, the appraiser we selected wasn't any more expensive than the others.
Further details about legal methods of tax avoidance are available in our subscriber's web site. Changes in the tax laws and research reports on how to avoid excessive taxes are provided in our monthly newsletter - Vern Jacobs' Tax Solutions
About the author:
Vernon Jacobs is a CPA/CLU who works as a tax author and consultant. He writes Vern Jacob s' Tax Solutions, is the author of The Jacobs Report on Asset Protection Strategies, and serves as the Tax Editor for OFFSHORE, an eJournal. He has “big six” CPA experience and spent 12 years as a senior financial executive for an insurance company. He’s been the software columnist for Personal Financial Planning for five years. His email address is vkj@rpifs.com and his web site is http://www.rpifs.com/apvkj.htm He can be reached by phone or fax at (913) 362-9667.
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