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Required: Calculate the amount of estate tax due (if any) under the following alternatives. (Refer to Exhibit 25-1 and Exhibit 25-2.) (Enter your answers in dollars and not in millions of dollars.) a. Roland’s prior taxable gifts consist of a taxable gift of $1 million in 2005. b. Roland’s prior taxable gifts consist of a taxable gift of $1.5 million in 2005. c. Roland made a $1 million taxable gift in the

Required: Calculate the amount of estate tax due (if any) under the following alternatives. (Refer to Exhibit 25-1 and Exhibit 25-2.) (Enter your answers in dollars and not in millions of dollars.) a. Roland’s prior taxable gifts consist of a taxable gift of $1 million in 2005. b. Roland’s prior taxable gifts consist of a taxable gift of $1.5 million in 2005. c. Roland made a $1 million taxable gift in the

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Roland had a taxable estate of $16.2 million when he died this year.

Required:
Calculate the amount of estate tax due (if any) under the following alternatives. (Refer to Exhibit 25-1 and Exhibit 25-2.) (Enter your answers in dollars and not in millions of dollars.)

a. Roland’s prior taxable gifts consist of a taxable gift of $1 million in 2005.

b. Roland’s prior taxable gifts consist of a taxable gift of $1.5 million in 2005.

c. Roland made a $1 million taxable gift in the year prior to his death.

 

EXHIBIT 25-1 Unified Transfer Tax Rates* Tax Base Equal to or Over $0 10,000 20,000 40,000 60,000 80,000 100,000 150,000 250,000 500,000 750,000 1,000,000 Not Over $10,000 20,000 40,000 60,000 80,000 100,000 150,000 250,000 500,000 750,000 1,000,000 Plus 18% 20 22 24 26 28 30 32 34 37 39 40 *The applicable credit and exemption are zero for estates that opted out of the estate tax in 2010. Tentative Tax $0 1,800 3,800 8,200 13,000 18,200 23,800 38,800 70,800 155,800 248,300 345,800 of Amount Over $0 10,000 20,000 40,000 60,000 80,000 100,000 150,000 250,000 500,000 750,000 1,000,000
Transcribed Image Text:EXHIBIT 25-1 Unified Transfer Tax Rates* Tax Base Equal to or Over $0 10,000 20,000 40,000 60,000 80,000 100,000 150,000 250,000 500,000 750,000 1,000,000 Not Over $10,000 20,000 40,000 60,000 80,000 100,000 150,000 250,000 500,000 750,000 1,000,000 Plus 18% 20 22 24 26 28 30 32 34 37 39 40 *The applicable credit and exemption are zero for estates that opted out of the estate tax in 2010. Tentative Tax $0 1,800 3,800 8,200 13,000 18,200 23,800 38,800 70,800 155,800 248,300 345,800 of Amount Over $0 10,000 20,000 40,000 60,000 80,000 100,000 150,000 250,000 500,000 750,000 1,000,000
EXHIBIT 25-2 The Exemption Equivalent Year of Transfer Gift Tax $500,000 600,000 625,000 650,000 675,000 1,000,000 1,000,000 1,000,000 1,000,000 5,000,000 5,120,000 5,250,000 5,340,000 5,430,000 5,450,000 5,490,000 11,180,000 11,400,000 11,580,000 11,700,000 Estate Tax $500,000 600,000 625,000 650,000 675,000 1,000,000 1,500,000 2,000,000 3,500,000 2011 5,000,000 2012 5,120,000 2013 5,250,000 2014 5,340,000 2015 5,430,000 2016 5,450,000 2017 5,490,000 2018 11,180,000 2019 11,400,000 2020 11,580,000 2021 11,700,000 *The applicable credit and exemption are zero for taxpayers who opt out of the estate tax in 2010. 1986 1987-1997 1998 1999 2000-2001 2002-2003 2004-2005 2006-2008 2009-2010*
Transcribed Image Text:EXHIBIT 25-2 The Exemption Equivalent Year of Transfer Gift Tax $500,000 600,000 625,000 650,000 675,000 1,000,000 1,000,000 1,000,000 1,000,000 5,000,000 5,120,000 5,250,000 5,340,000 5,430,000 5,450,000 5,490,000 11,180,000 11,400,000 11,580,000 11,700,000 Estate Tax $500,000 600,000 625,000 650,000 675,000 1,000,000 1,500,000 2,000,000 3,500,000 2011 5,000,000 2012 5,120,000 2013 5,250,000 2014 5,340,000 2015 5,430,000 2016 5,450,000 2017 5,490,000 2018 11,180,000 2019 11,400,000 2020 11,580,000 2021 11,700,000 *The applicable credit and exemption are zero for taxpayers who opt out of the estate tax in 2010. 1986 1987-1997 1998 1999 2000-2001 2002-2003 2004-2005 2006-2008 2009-2010*
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Would the exclusion be 11,700,000 assuming Rolands death was in 2021 according to the chart?

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