Jack is single and he made his first taxable gift of $1,000,000 in 2008. Jack ma
ID: 2486106 • Letter: J
Question
Jack is single and he made his first taxable gift of $1,000,000 in 2008. Jack made no further gifts until 2009, at which time he gave $1,750,000 to each of his three children and an additional $1,000,000 to State University (a charity). The annual exclusion in 2009 was $13,000. Recently Jack has been in poor health and would like you to estimate his estate tax should he die this year. Jack estimates his taxable estate (after deductions) will be worth $5.4 million at his death. (Reference the tax rate schedule in Exhibit 25-1and the Unified Credit schedule in Exhibit 25-2to answer this problem.) (Enter your answer in dollars not in millions.)
Jack is single and he made his first taxable gift of $1,000,000 in 2008. Jack made no further gifts until 2009, at which time he gave $1,750,000 to each of his three children and an additional $1,000,000 to State University (a charity). The annual exclusion in 2009 was $13,000. Recently Jack has been in poor health and would like you to estimate his estate tax should he die this year. Jack estimates his taxable estate (after deductions) will be worth $5.4 million at his death. (Reference the tax rate schedule in Exhibit 25-1and the Unified Credit schedule in Exhibit 25-2to answer this problem.) (Enter your answer in dollars not in millions.)
Explanation / Answer
Particulars::::::::::::::::::::::::::::::::::::::::::::Amount
Gross Estate :::::::::::::::::::::::::::::::::::::$6,250,000($1,750,000 * 3=$5,250,000+$1,000,000)
Less:
Deductions:::::::::::::::::::::::::::::::::::::::::$3,500,000(upto exemptions)
___________________________________________________
Taxable Estate::::::::::::::::::::::::::::::::::::$2750,000
ADD:
Adjustable Taxable Gifts:::::::::::::::::::$5,250,000($1,000,000 can exemption for life time gift
________________________________________
Cumulative taxable Transfers::::::::::::::$8,000,000
Less :Tax: 45%*$8,000,000::::::::::::::::$3,600,000
______________________________________
Estate Tax:::::::::::::::::::::::::::::::::::::::::::$4400,000
_________________________________________
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