Question
In: Accounting
Morgan, a widow, recently passed away. The value of her assets at the time of death...
Morgan, a widow, recently passed away. The value of her assets at the time of death was $9,693,000. The cost of her funeral was $6,772, while estate administrative costs totaled $39,989. As stipulated in her will, she left $999,580 to charities. Based on this information answer the following questions:
a. Determine the value of Morgan's gross estate.
b. Calculate the value of her taxable estate.
c. What is her gift-adjusted taxable estate value?
d. Assuming she died in 2014, how much of her estate would be subject to taxation?
e. Calculate the estate tax liability.
Solutions
Expert Solution
Solution:
a. Determine the value of Morgan's gross estate.
Morgan's gross estate = $9,693,000
.
b. Calculate the value of her taxable estate.
| Details | Amount($) |
| Gross estate | $9,693,000 |
| Less: Funeral expense | ($6,772) |
| Admin expense | ($39,989) |
| Adjusted gross estate | |
| Less: Marital deduction | $0 |
| Charitable deduction | ($999,580) |
| Taxable estate | $8,646,659 |
c. What is her gift-adjusted taxable estate value?
Gift-adjusted taxable estate = Taxable estate - Adjusted taxable gifts
= $8,646,659 - $0
= $8,646,659
d. Assuming she died in 2014, how much of her estate would be subject to taxation?
| Details | Amount($) |
| Gross estate | $9,693,000 |
| Less: Funeral expense | ($6,772) |
| Admin expense | ($39,989) |
| Adjusted gross estate | |
| Less: Marital deduction | $0 |
| Charitable deduction | ($999,580) |
| Estate subject to taxation | $8,646,659 |
.
e. Calculate the estate tax liability.
= $8,646,659 - $5,340,000) * 40%
= $1,560,332
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