EXHIBIT 25-2 The Exemption Equivalent Year of Transfer 1986 Gift Tax $500,000 Estate Tax $500,000 EXHIBIT 25-1 Unified Transfer Tax Rates* 1987-1997 600,000 600,000 Tax Base Equal to or Over Not Over Tentative Tax Plus of Amount Over 1998 625,000 625,000 $ 0 $10,000 $ 0 18% $ 0 1999 650,000 650,000 10,000 20,000 1,800 20 10,000 2000-2001 675,000 675,000 20,000 40,000 3,800 22 20,000 2002-2003 1,000,000 1,000,000 40,000 60,000 8,200 24 40,000 2004-2005 1,000,000 1,500,000 60,000 80,000 13,000 26 60,000 2006-2008 1,000,000 2,000,000 80,000 100,000 18,200 28 80,000 2009-2010* 1,000,000 3,500,000 100,000 150,000 23,800 30 100,000 2011 5,000,000 5,000,000 150,000 250,000 38,800 32 150,000 2012 5,120,000 5,120,000 250,000 500,000 70,800 34 250,000 2013 5,250,000 5,250,000 500,000 750,000 155,800 37 500,000 2014 5,340,000 5,340,000 750,000 1,000,000 248,300 39 750,000 2015 5,430,000 5,430,000 1,000,000 345,800 40 1,000,000 2016 5,450,000 5,450,000 2017 5,490,000 5,490,000 *The applicable credit and exemption are zero for estates that opted out of the estate tax in 2010. 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 *The applicable credit and exemption are zero for taxpayers who opt out of the estate tax in 2010. Jones is seriously ill and has $4.9 million of property that he wants to leave to his four children. He is considering making a current gift of the property (rather than leaving the property to pass through his will). Assume all of his exemption equivalent was used and any taxable transfers will be subject to the highest transfer tax rate. (Refer to Exhibit 25-1 and Exhibit 25-2.) Required: a-1. Determine how much gift tax Jones will owe if he makes the transfers now. a-2. If he makes a current gift, how much estate tax will Jones save if he dies after three years, during which time the property appreciates to $5.45 million? (For all requirements, enter your answers in dollars and not in millions of dollars.) Answer is complete but not entirely correct. a-1. Amount of gift tax a-2. Amount of estate tax savings $ 138,400 $ 138,400 ×