A more thorough explanation:

Unified estate and gift tax is a tax system that combines the applicable exclusion amount and other parts of estate and gift taxes. This system was established by the 2010 Tax Relief Act. Before this act, estate and gift taxes had different exclusion amounts and rules. However, after 2011, these two taxes were linked together to receive the same tax rates and the same applicable exclusion amount.

Let's say that John wants to give his daughter a gift of $100,000. Under the unified estate and gift tax system, John can give his daughter the gift without having to pay any gift tax, as long as he has not used up his applicable exclusion amount. The applicable exclusion amount for 2021 is $11.7 million, which means that John can give away up to $11.7 million during his lifetime without having to pay any gift tax. If John has already used up his applicable exclusion amount, he will have to pay gift tax on the $100,000 gift.

Another example is when someone passes away and leaves behind an estate worth $15 million. Under the unified estate and gift tax system, the estate will be subject to estate tax. However, the estate will only be taxed on the amount that exceeds the applicable exclusion amount. For example, if the applicable exclusion amount is $11.7 million, the estate will only be taxed on the remaining $3.3 million.

These examples illustrate how the unified estate and gift tax system works. It simplifies the tax system by linking estate and gift taxes together and providing a single applicable exclusion amount for both taxes.