Which tax cost is normally associated with death?

The federal estate tax is the correct answer because it is a tax applied to the transfer of the decedent's estate. When an individual passes away, their estate, which includes all assets owned at the time of death, may be subject to taxation based on its total value. This tax is calculated on the value of the estate after debts and expenses have been deducted, and it is the responsibility of the estate to pay this tax before the distribution of assets to heirs or beneficiaries.

The federal estate tax only comes into play if the value of the estate exceeds a specific threshold, which is adjusted periodically for inflation. Understanding the estate tax is essential for financial planning, as it can significantly impact the amount passed on to heirs.

In contrast, capital gains tax is more relevant to the sale of assets during a person's lifetime rather than at death. Income tax generally applies to earnings and profits rather than the estate itself. Gift tax is imposed on transfers made during one's lifetime and is not directly tied to death but rather to the act of giving gifts while alive.