Federal Estate, Gift, and Generation-skipping Taxes: A Description of Current Law

This report contains an explanation of the major provisions of the federal estate, gift, and generation-skipping transfer taxes. The discussion divides the federal estate tax into three components: the gross estate, deductions from the gross estate, and computation of the tax, including allowable tax credits. The federal estate tax is computed through a series of adjustments and modifications of a tax base known as the "gross estate." Certain allowable deductions reduce the gross estate to the "taxable estate," to which is then added the total of all lifetime taxable gifts made by the decedent. The tax rates are applied and, after reduction for certain allowable credits, the amount of tax owed by the estate is reached.