Question

Suppose Vince dies this year with a gross estate of $25 million and no adjusted prior gifts. Assume the estate qualifies for the martial deduction.

Calculate the amount of estate tax due (if any) under the following alternative conditions for 2018. (Refer to Exhibit 25-1 and Exhibit 25-2.)

Exhibit 25-2 The Exemption Equivalent

Year of Transfer                Gift Tax                 Estate Tax           

2018                                       11,180,000           11,180,000

Exhibit 25-1		Unified Transfer Tax Rates
Tax Base Equal to or Over	Not Over	Tentative Tax	Plus	of Amount Over
$          -	$     10,000	$             -	18%	$          -
10,000	20,000	1,800	20	10,000
20,000	40,000	3,800	22	20,000
40,000	60,000	8,200	24	40,000
60,000	80,000	13,000	26	60,000
80,000	100,000	18,200	28	80,000
100,000	150,000	23,800	30	100,000
150,000	250,000	38,800	32	150,000
250,000	500,000	70,800	34	250,000
500,000	750,000	155,800	37	500,000
750,000	1,000,000	248,300	39	750,000
1,000,000		345,800	40	1,000,000
*The applicable credit and exemption is zero for estates that opted out of the estate tax in 2010

Required:

1. Vince leaves his entire estate to his spouse, Millie.
2. Vince leaves $10 million to Millie and the remainder to charity.
3. Vince leaves $10 million to Millie and the remainder to his son, Paul.
4. Vince leaves $10 million to Millie and the remainder to a trust whose trustee is required to pay income to Millie for her life and the remainder to Paul(

For all requirements, enter your answer in millions rounded to 3 decimal places. Leave no answer blank. Enter zero if applicable.)

A. Amount of estate tax  

B. Amount of estate tax  

C. Amount of estate tax  

D. Amount of estate tax  

Answer 1

	The Exemption Equivalent	$ Millions
	Gift Tax	$                   11.18
	Estate Tax	$                   11.18
	Total Exemption	$                   22.36
A	Vince leaves his entire estate to his spouse, Millie
	Gross Estate	$                   25.00
	Taxable Estate	$                     2.64
	Estate Tax	$                     0.35	on	$                   1.00	Million
		$                     0.66	on	$                   1.64	Balance	$2,640,000 - $1,000,000
	Total	$                     1.00
B	Vince leaves $10 million to Millie and the remainder to charity.
	Gross Estate	$                   10.00
Less:	Marital Deduction	$                     5.60
	Net estate	$                     4.40
Less:	Estate Tax Exemption	$                     4.40
	Estate Tax payable	$                          -
C	Vince leaves $10 million to Millie and the remainder to his son, Paul.
	For Millie
	Gross Estate	$                   10.00
Less:	Marital Deduction	$                     5.60
	Net State	$                     4.40
Less:	Estate Tax Exemption	$                     4.40
	Estate Tax payable	$                          -
	For Paul
	Gross Estate	$                   15.00
Less:	Marital Deduction	$                          -
	Net State	$                   15.00
Less:	Estate Tax Exemption	$                   11.18
	Estate Tax payable	$                     3.82
D	Vince leaves $10 million to Millie and the remainder to a trust whose trustee is required to pay income to Millie for her life and the remainder to Paul
	For Millie
	Gross Estate	$                   10.00
Less:	Marital Deduction	$                     5.60
	Net State	$                     4.40
Less:	Estate Tax Exemption	$                     4.40
	Estate Tax payable	$                          -
	For Trust
	Gross Estate	$                   15.00
Less:	Marital Deduction	$                          -
	Net estate	$                   15.00
	Estate Tax	$                     0.35	on	$                   1.00	Million
		$                     5.60	on	$                14.00	Balance	$1,500,000 - $1,000,000
	Estate Tax payable	$                     5.95