Question

Distinguish between individual income tax and an estate (or gift) tax

Answer 1

Individual income tax is the tax which is levied on the income of an individual . An individual may earn income from various ways like slaary, profits from business and profession carried by the person or the gain on sale of a property or any interest income. This, all these income are charges or to federal tax if it exceeds the basic threshold limits. Further various deductions are available to a person which can be claimed by him to reduce the burden of taxation from him.

Estate tax is the tax that is levied on the property inherited by the heir's if the value of the estate exceeds an exclusion set up by the law.

So we can see there is a fundamental huge difference between both kinds of tax.

Note that gift tax is different from estate tax , estate tax is levied on the estate of a dead person when it is inherited by his heir's whereas gift tax is levied on any property being gifted by the person to another person.

So all these taxes have different meaning and different implications and affects differently.