Federal and state estate taxes are best described as

• A. Taxes on the transfer of property from decedent to beneficiaries
• B. Taxes on the decedent's income
• C. Taxes on the recipient's income
• D. Taxes on funeral costs

Answer: (A)

Estate taxes are taxes on the transfer of property at death. When someone dies, the total value of their estate is assessed, debts and expenses are paid, and what remains is transferred to beneficiaries. The government imposes an estate tax on that transfer, and the tax is charged to the estate itself rather than to the decedent’s lifetime income or the recipients’ future incomes. Funeral costs are not taxes; they are expenses paid from the estate and do not themselves constitute an estate tax. So the description that fits best is taxes on the transfer of property from decedent to beneficiaries.