When Frank died in 2013, he left $9,000,000 to his grandchildren. Frank also lef

Question

When Frank died in 2013, he left $9,000,000 to his grandchildren. Frank also left a residuary estate of$5,000,000, which his w-il-l d-ire-cts-is-to -pay--- any GST or estate tax resulting from his death. Any residuary estate remaining after paying these taxes is to be distributed among Lee's living children. Frank's children all are still alive. Frank made no taxable gifts in any prior years. Answer each of the following questions. Q1 What tax rate will be used for computing the GST in this case, if applicable? .Q2 Frank's estate owes how much estate tax? Q3 Frank's estate owes how much generation skipping tax? A. $1,500,000 B. $900,000 C. $1,400,000 D. $3,500,000 E. 28.5714% (allow for rounding) F. 40% G.0% H.$674,074 (allow for rounding) I. 35% J. 25.9259% K.$0

Explanation / Answer

1) 40% tax rate will be used.

2)When a gross estate exceeds the federal estate tax exemption for the year of the decedent's death, the estate must file a federal estate tax return called Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return.

In the given case, Frank died in 2013, when Estate tax was 40%, and exemption was 5.25millions.Therefore Frank's estate owes zero as Estate tax.

3) 1)n this case, it applies if a generation exists between the donor and the recipient, such as a parent between a grandparent and a grandchild.

$ 1500000 will be the generation skipping tax

$900000-$5250000=$3750000*40%= $1500000

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