Harold and Maude were married and lived in a common-law state. Maude died in 2018 with a taxable estate of $25.8 million and left it all to Harold. Maude's executor filed a timely estate tax return claiming the marital deduction for the property left to Harold including a valid portability election. Harold died this year, leaving a total estate of $25.8 million to their three children.(Refer to Exhibit 25-1 and Exhibit 25-2.) Calculate how much estate tax is due from Harold's estate under the following two alternatives. A. Assume that neither Harold nor Maude had made any taxable gifts prior to this year. B. Assume that Harold and Maude each made a $1 million taxable gift in 2011 and offset the gift tax at that time with the applicable credit. Note: For all requirements, enter your answers in dollars and not in millions of dollars. EXHIBIT 25-1 Unified Transfer Tax Rates* Tax Base Equal to or Over Not Over Tentative Tax Plus of Amount Over $ 0 $10,000 $ 0 18% $ 0 10,000 20,000 1,800 20 10,000 20,000 40,000 3,800 22 20,000 40,000 60,000 8,200 24 40,000 60,000 80,000 13,000 26 60,000 80,000 100,000 18,200 28 80,000 100,000 150,000 23,800 30 100,000 150,000 250,000 38,800 32 150,000 250,000 500,000 70,800 34 250,000 500,000 750,000 155,800 37 500,000 750,000 1,000,000 248,300 39 750,000 1,000,000 345,800 40 1,000,000 EXHIBIT 25-2 The Exemption Equivalent / Applicable Exclusion Amount Year of Transfer Gift Tax Estate Tax 1986 $500,000 $500,000 1987 1997 600,000 600,000 1998 625,000 625,000 1999 650,000 650,000 2000 2001 675,000 675,000 2002 2003 1,000,000 1,000,000 2004 2005 1,000,000 1,500,000 2006 2008 1,000,000 2,000,000 2009 2010* 1,000,000 3,500,000 2011 5,000,000 5,000,000 2012 5,120,000 5,120,000 2013 5,250,000 5,250,000 2014 5,340,000 5,340,000 2015 5,430,000 5,430,000 2016 5,450,000 5,450,000 2017 5,490,000 5,490,000 2018 11,180,000 11,180,000 2019 11,400,000 11,400,000 2020 11,580,000 11,580,000 2021 11,700,000 11,700,000 2022 12,060,000 12,060,000 2023 12,920,000 12,920,000 2024 13,610,000 13,610,000

Harold and Maude were married and lived in a common-law state. Maude died in 2018 with a taxable estate of $25.8 million and left it all to Harold. Maude's executor filed a timely estate tax return claiming the marital deduction for the property left to Harold including a valid portability election. Harold died this year, leaving a total estate of $25.8 million to their three children.(Refer to Exhibit 25-1 and Exhibit 25-2.) Calculate how much estate tax is due from Harold's estate under the following two alternatives. A. Assume that neither Harold nor Maude had made any taxable gifts prior to this year. B. Assume that Harold and Maude each made a $1 million taxable gift in 2011 and offset the gift tax at that time with the applicable credit. Note: For all requirements, enter your answers in dollars and not in millions of dollars. EXHIBIT 25-1 Unified Transfer Tax Rates* Tax Base Equal to or Over Not Over Tentative Tax Plus of Amount Over $ 0 $10,000 $ 0 18% $ 0 10,000 20,000 1,800 20 10,000 20,000 40,000 3,800 22 20,000 40,000 60,000 8,200 24 40,000 60,000 80,000 13,000 26 60,000 80,000 100,000 18,200 28 80,000 100,000 150,000 23,800 30 100,000 150,000 250,000 38,800 32 150,000 250,000 500,000 70,800 34 250,000 500,000 750,000 155,800 37 500,000 750,000 1,000,000 248,300 39 750,000 1,000,000 345,800 40 1,000,000 EXHIBIT 25-2 The Exemption Equivalent / Applicable Exclusion Amount Year of Transfer Gift Tax Estate Tax 1986 $500,000 $500,000 1987 1997 600,000 600,000 1998 625,000 625,000 1999 650,000 650,000 2000 2001 675,000 675,000 2002 2003 1,000,000 1,000,000 2004 2005 1,000,000 1,500,000 2006 2008 1,000,000 2,000,000 2009 2010* 1,000,000 3,500,000 2011 5,000,000 5,000,000 2012 5,120,000 5,120,000 2013 5,250,000 5,250,000 2014 5,340,000 5,340,000 2015 5,430,000 5,430,000 2016 5,450,000 5,450,000 2017 5,490,000 5,490,000 2018 11,180,000 11,180,000 2019 11,400,000 11,400,000 2020 11,580,000 11,580,000 2021 11,700,000 11,700,000 2022 12,060,000 12,060,000 2023 12,920,000 12,920,000 2024 13,610,000 13,610,000

SWFT Corp Partner Estates Trusts

42nd Edition

ISBN:9780357161548

Author:Raabe

Publisher:Raabe

Chapter18: The Federal Gift And Estate Taxes

Section: Chapter Questions

Problem 44P

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Tax Base Equal to or Over	Not Over	Tentative Tax	Plus	of Amount Over
$ 0	$10,000	$ 0	18%	$ 0
10,000	20,000	1,800	20	10,000
20,000	40,000	3,800	22	20,000
40,000	60,000	8,200	24	40,000
60,000	80,000	13,000	26	60,000
80,000	100,000	18,200	28	80,000
100,000	150,000	23,800	30	100,000
150,000	250,000	38,800	32	150,000
250,000	500,000	70,800	34	250,000
500,000	750,000	155,800	37	500,000
750,000	1,000,000	248,300	39	750,000
1,000,000		345,800	40	1,000,000

Year of Transfer	Gift Tax	Estate Tax
1986	$500,000	$500,000
1987 1997	600,000	600,000
1998	625,000	625,000
1999	650,000	650,000
2000 2001	675,000	675,000
2002 2003	1,000,000	1,000,000
2004 2005	1,000,000	1,500,000
2006 2008	1,000,000	2,000,000
2009 2010*	1,000,000	3,500,000
2011	5,000,000	5,000,000
2012	5,120,000	5,120,000
2013	5,250,000	5,250,000
2014	5,340,000	5,340,000
2015	5,430,000	5,430,000
2016	5,450,000	5,450,000
2017	5,490,000	5,490,000
2018	11,180,000	11,180,000
2019	11,400,000	11,400,000
2020	11,580,000	11,580,000
2021	11,700,000	11,700,000
2022	12,060,000	12,060,000
2023	12,920,000	12,920,000
2024	13,610,000	13,610,000