Tom Hruise was an entertainment executive who had a fatal accident on a film set

Question

Tom Hruise was an entertainment executive who had a fatal accident on a film set. Tom’s will directed his executor to distribute his cash and stock to his wife, Kaffie, the real estate to his church, The First Church of Methodology, and the remainder of his assets were to be placed in trust for his three children. Tom’s estate consisted of the following: (Refer toExhibits 25-1 and Exhibit 25-2.)

a. Tom made a taxable gift of $6.20 million in 2011. Compute the estate tax for Tom’s estate.

Assets: Personal assets $ 1,090,000 Cash and stock 25,100,000 Intangible assets (film rights) 77,000,000 Real estate 16,100,000 $ 119,290,000 Liabilities: Mortgage $ 4,300,000 Other liabilities 5,200,000 $ 9,500,000

Explanation / Answer

Computation of estate tax

Gross estate = $119200000

(-) Debts $9500000

Adjusted gross estate $109700000

(-) trannsfer to wife $25100000

(-) transfer to trust $16100000

Net estate $68500000

+ taxable gift &6200000

Taxable estate &62300000

(-)basic exemption for 2017 $5490000

Txable $56810000

Tax @40% $22724000

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