The Federal Estate Tax for 2013 is 5 mil. This is of course linked to the unified gift tax credit taking into consideration all gifts greater than the gift tax exemption (14k for 2013). We have a bunch of turkeys in Washington and our tax policies are the laughing stock of the world.
Uncle Sam feels he's getting screwed by not collecting capital gains when the owner is still alive. At death the recipient receives a stepped up cost basis, ie the value of the asset when the donor dies. If the donee received the gift when the donor was still alive, the donee would inherit the donor's cost basis. Clear as mud?
