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

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Chapter1: Financial Statements And Business Decisions
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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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