Question

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9. Computing the federal transfer tax - Practice 2 Aa Aa Lester Midgley died in 2012, leaving an estate of $21,000,000. Lester's wife died in 2009. In 2009, Lester gave his son property that resulted in a taxable gift of $4,000,000 and upon which Lester paid $950,000 in transfer taxes. Lester had made no other taxable gifts during his life. Lester's will provided a charitable bequest of $500,000 to his synagogue. Use the following worksheet and Exhibits 15.7 and 15.8 to determine the federal transfer tax on Lester Midgley's estate. Enter a value of $0 for any line that does not apply.

Answer 1

	Computation	Item	Amount	Total amount
		Gross estate		21,000,000
	Subtract sum of:	(a)Funeral expenses	0
		(b) Administrative expenses	0
		(c)Debts	0
		(d) Other expenses	0
		Total		0
	Result	Adjusted gross estate		21,000,000
	Subtract sum of:	(a)Marital deduction	0
		(b)Charitable deduction	500,000	500,000
		Total		20,500,000
	Result:	Taxable estate		20,500,000
	Add:	Adjusted taxable gifts (post-1976)		4,000,000
	Result:	Estate tax base		24,500,000
	Compute:	Tentative tax on estate tax base		9,163,154
	Subtract sum of:	(a) Gift tax payable on post - 1976 gifts	950,000
		(b) unified tax credit	1,772,800
		Total		2,772,800
	Result:	Total estate taxes		6,440,354
	Subtract:	Other credits	0
	Result:	Federal estate tax due		6,440,354

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