Question

Mr. Smith died on June 1, 2019. His taxable estate was $18 million.

Compute his estate tax payable if he previously used $5 million of his lifetime transfer tax exclusion on taxable gifts made during his lifetime.

Answer 1

The 2019 estate tax rates:

For Taxable Estates in This Range	You'll Pay This Base Amount of Tax	Plus This Rate on the Excess Above the Lower End of the Range
$250,000 to $500,000	$70,800	34%
$500,000 to $750,000	$155,800	37%
$750,000 to $1 million	$248,300	39%
$1 million and up	$345,800	40%

In 2019, There is a change in laws that The Internal Revenue Service announced that the official estate and gift tax limits for 2019: The estate and gift tax exemption is $11.4 million per individual, up from $11.18 million in 2018. That means an individual can leave $11.4 million to heirs and pay no federal estate or gift tax, while a married couple will be able to shield $22.8 million.

Before die, Mr. Smith, transfer his life time wealth $ 5 million . The same is taxable @20% and accordingly $1 million ($10 lacs) have to be to tax department. (A)

Balance $ 13 million (18-5), since the amendment has come in 2019 that there is an exemption for $11.40 Million and no tax have to be paid there on.

Balance on $1.6, Mr. Smith's inherities have to be pay tax as per given above slab:

As per above slab:

Up to $1 Million $345800

More than $1 Million $240000

($ 6,00,000*40%)

Total Tax $5,85,800 (A)

Total Tax (A+B) $15,85,800 ($1.5858 Million)