Question

8. Computing the federal transfer tax - Practice 1 Aa Aa When Orville Kingshill died in 2012, he left an estate valued at $25,000,000. His trust directed distribution as follows: $400,000 in chanitable deductions ($75,000 to the local hospital plus $325,000 to his alma mater), and the remainder to his four adult children. Death-related costs were s9,500 for funeral expenses, and $150,000 in administrative expenses ($70,000 paid to attorneys, $20,oo0 paid to accountants, and $60,000 paid to the trustee of his living trust. In addition, there were debts of $850,000 g worksheet and Exhibits 15.7 and 15.8 to calculate the federal estate tax due on orville Kingshill's estate. Enter a value of so for any line that does not apply Computing Federal Estate Tax Due Name: Orville Kingshill Line Computation Date: 11/30/2012 Item Gross estate (a) Funeral expenses (b) Administrative expenses (c) Debts (d) Other expenses Amount Total Amount Subtract sum of: Total: 3 Result: Adjusted gross estate Subtract sum of: (a) Marital deduction (b) Charitable deduction Total Result: Add Taxable estate Adjusted taxable gifts (post-1976) Fstate tax base 6

Answer 1

1) Gross Estate - $25,000,000

2) subtract sum of : a) Funeral expenses - $9500

b) Administrative Expenses - $150,000

c) Debts - $850,000

d) Other expenses - $0

Total - $10,950,00

3) Result : Adjusted gross estate - $23.990,500

4) subtract sum of : a) Marital deduction - $0

b) Charitable deduction - $400,000

Total - $23,590,500

5) Result : Taxable estate - $23,590,500

6) Add : Adjustable taxable gifts(post - 1976) - $0

7) Result: Estate tax base - $23.590,500

8) Compute: Tentative tax on estate tax base - $12,190,500

9) subtract sum of : a) Gift tax payable on post - 1976 gifts - $0

b) Unified tax credit - $0

Total - $12,190,500

10) Result : Total estate tax - $4,876,200 ( $12,190,500 x 40% = $4,876,200)

11) Subtract : Other credit - $0

12) Federal Estate Tax Due : $4,876,200

Note:

For 2019, the taxable estate after exemption is $12,190,500, the federal estate tax is $4,876,200, and the after tax value is $18,714,300.

If it was 2018, the taxable estate after exemption is $12,410,500, the federal estate tax is $4,964,200, and the after tax value is $18,626,300.