Question

Roland had a taxable estate of $16.3 million when he died this year.

a. Roland’s prior taxable gifts consist of a taxable gift of $1 million in 2005.

-Estate Tax Due

b. Roland’s prior taxable gifts consist of a taxable gift of $1.5 million in 2005.

-Estate Tax Due

c. Roland made a $1 million taxable gift in the year prior to his death.

-Estate tax due

Answer 1

The year of death of Roland is not clear from the problem, we assume that he died in 2020. As per the gift tax and estate tax rules, the exemption limit prescribed for 2020 is $ 11.58 million. For gift tax the onus of tax is usually imposed on the donor. If an interest in property is transferred during the giver's lifetime then the gift or transfer would not be subject to the estate tax.

In part A & B - We assume that the taxable gift were received by Roland and forms part of the current taxable estate value of $ 16.3 & in part C Roland made the gift and hence to pay tax on it is his onus hence it is included in computing the estate tax.

Solution A	Particulars	Amount
	Value of taxable estate	16,300,000
	Less taxable gifts	(1,000,000)
	Exemption as prescribed	(11,580,000)
	Total taxable value	3,720,000
	Estate tax @ 40%	1,488,000
Solution B	Particulars	Amount
	Value of taxable estate	16,300,000
	Less taxable gifts	(1,500,000)
	Exemption as prescribed	(11,580,000)
	Total taxable value	3,220,000
	Estate tax @ 40%	1,288,000
Solution C	Particulars	Amount
	Value of taxable estate	16,300,000
	Exemption as prescribed	11,580,000
		4,720,000
	Estate tax @ 40%	1,888,000