Estate Tax Base: At the date of his death in 2018, Raymond owned the following a
ID: 2412454 • Letter: E
Question
Estate Tax Base:
At the date of his death in 2018, Raymond owned the following assets:
1. Cash of 2,500,000 in a bank account.
2. Stock owned jointly by him and his wife of $1,000,000, which was purchased for $500,000 ten years ago.
3. A life insurance policy of Raymond's life of $2,000,000 with his wife as the designated beneficiary.
4. Land purchased with his sister in joint tenancy for $1,500,000 with Raymond purchasing all of the land. In addition, Raymond made a cash gift of $100,000 to his sister in 2015.
He also paid the tuition for his nephew to attend Oklahoma Christian University and paid $20,000 directly to OC.
How much of the above amounts will be included in his taxable transfers in order to
calculate his estate tax due:
Taxable Transfers: Amount Included in
Estate Tax Calculation (NOT Gross Estate)
1. Cash
2. Stock
3. Life Insurance
4. Land
5. Gift to Sister
6. Gift to Nephew
7. Assuming Raymond had funeral and administrative expenses of $100,000, what is his estate tax liability? (Show Calculations!)
Explanation / Answer
Calculation of Tax Liability:
Add
Cash in bank A/c 2500000
Stock jointly owned 1000000
Land Purchased 1500000
Cash Gift 100000
Gross Taxable value 5100000
Less
Life insurance policy 2000000
Tution fees 20000
Mediclaim exp(funeral) 100000
Total Deduction 2120000
Net Taxable value: 5100000-2120000 = 2980000
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