At her death in 2015, Sarah had a taxable estate that was worth $7,430,000. For each...

At her death in 2015, Sarah had a taxable estate that was worth $7,430,000. For each of the following situations, compute the estate tax that is due at Sarah's death.

				At her death in 2015, Sarah was single (never married). Sarah had made no taxable gifts during her lifetime.
				At her death in 2015, Sarah was single (never married). In 2011, Sarah had made a taxable gift valued at $2,250,000.
				At her death in 2015, Sarah was single (never married). In 2009, Sarah had made a taxable gift valued at $2,250,000.
				At her death in 2015, Sarah was single (widowed). Sarah's husband had died in 2011 with a taxable estate of $2,250,000. Because Husband's taxable estate was less than his applicable exclusion amount (AEA) in 2011, no estate tax was filed. Sarah had made no taxable gifts during her lifetime.
				At her death in 2015, Sarah was single (widowed). Sarah's husband had died in 2011 with a taxable estate of $2,250,000. Although Husband's taxable estate was less than his applicable exclusion amount (AEA) in 2011, an estate tax was filed for the sole purpose of electing portability with respect to his unused AEA. Sarah had made no taxable gifts during her lifetime.

A.	Sarah's estate tax is $1,487,500.
B.	Sarah's estate tax is $1,200,000.
C.	None of the other answers is correct.
D.	Sarah's estate tax is $0.
E.	Sarah's estate tax is $2,655,800.
F.	Sarah's estate tax is $700,000.
G.	Sarah's estate tax is $800,000.
H.	Sarah's estate tax is $1,700,000.
I.	Sarah's estate tax is $1,050,000.

Expert Solution

1.At her death in 2015, Sarah was single (never married). In 2011, Sarah had made a taxable gift valued at $2,250,000.

SITUATIONS	A	B	C	D	E	F	G	H	I
ESTATE TAX	$1,487,500	$1,200,000	-	$0	$2,655,800	$700,000	$800,000	$1700,000	$1,050,000
ADD-	$2,250,000	$2,250,000	$2,250,000	$2,250,000	$2,250,000	$2,250,000	$2,250,000	$2,250,000	$2,250,000
TOTAL TAX	$3737500	$3450000	$2,250,000	$2,250,000	$4905800	$2950000	$3050000	$3950000	$3300000

2. At her death in 2015, Sarah was single (never married). In 2009, Sarah had made a taxable gift valued at $2,250,000.

COMPUTATION SAME AS ABOVE.

3.At her death in 2015, Sarah was single (widowed). Sarah's husband had died in 2011 with a taxable estate of $2,250,000. Because Husband's taxable estate was less than his applicable exclusion amount (AEA) in 2011, no estate tax was filed. Sarah had made no taxable gifts during her lifetime.

COMPUTATION SAME AS ABOVE. $2250000 IS TO BE ADDED OF HER HUSBAND'S ESTATE'S SHARE, AS NO TAX HAS BEEN PAID BY HER HUSBAND.

4. At her death in 2015, Sarah was single (widowed). Sarah's husband had died in 2011 with a taxable estate of $2,250,000. Although Husband's taxable estate was less than his applicable exclusion amount (AEA) in 2011, an estate tax was filed for the sole purpose of electing portability with respect to his unused AEA. Sarah had made no taxable gifts during her lifetime.

AS ESTATE TAX OF HER HUSBAND'S ESTATE HAS ALREADY BEEN PAID, SO THERE WILL NOT BE DOUBLE TAXATION.

SITUATIONS	A	B	C	D	E	F	G	H	I
ESTATE TAX	$1,487,500	$1,200,000	-	$0	$2,655,800	$700,000	$800,000	$1700,000	$1,050,000

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