Chapter 11, Problem 11.9P

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% $…

[The following information applies to the questions displayed below.] Demarco and Janine Jackson have been married for 20 years and have four children who qualify as their dependents (Damarcus; Jasmine, Michael, and Candice). The Jacksons file a joint tax return. The couple received salary income of $95,000 and qualified business income of $20,000 from an investment in a partnership, and they sold their home this year. They initially purchased the home three years ago for $250,000 and they sold it for $300,000. The gain on the sale qualified for the exclusion from the sale of a principal residence. The Jacksons incurred $18,500 of itemized deductions, and they had $4,000 withheld from their paychecks for federal taxes. They are also allowed to claim a child tax credit for each of their children. However, because Candice was 18 years of age at year end, the Jacksons may claim a child tax credit for other qualifying dependents for Candice. (Use the tax rate schedules.)

Montana oversees the Coffee Bean Division at the Sarasota Corp., and she is evaluating different options for the sale of the company's beans. In the past, the Coffee Bean Division has been selling to external customers only, and has been operating at full capacity. As the business grew and expanded, so did its production capacity. It is now operating with some idle capacity, and has been debating whether to sell internally to another business unit. The Coffee Maker Division has recently decided that it will be giving away a free pound of coffee with each brewer machine purchase. It anticipates needing 14,300 pounds of coffee in the coming year and is obtaining quotes both internally and externally. The Coffee Bean Division has a capacity of 177,000 pounds of coffee and reported the following for its external sales: 162,200 pounds resulting in sales of $204,300, variable costs of $123,272, and fixed costs of $54,300. An external vendor has offered the Coffee Maker Division the following…