Question

In: Accounting

Use Worksheet 15.2. When Russell Hypes died unmarried in 2012, he left an estate valued at...

Use Worksheet 15.2. When Russell Hypes died unmarried in 2012, he left an estate valued at $6,200,000. His trust directed distribution as follows: $5,000 to the local hospital, $75,000 to his alma mater, and the remainder to his three adult children. Death-related costs and expenses were $10,900 for funeral expenses, $50,000 paid to attorneys, $7,000 paid to accountants, and $25,000 paid to the trustee of his living trust. In addition, there were debts of $125,000. Use Worksheet 15.2 and Exhibit 15.7 and Exhibit 15.8 to calculate the federal estate tax due on his estate. Round your answer to nearest whole dollar.

1 Gross estate $            6,200,000.00
2 Subtract sum of: (a) Funeral expenses $                    10,900.00
(b) Administrative expenses                    82,000.00
(c) Debts                 125,000.00
(d) Other expenses
Total (                 217,900.00 )
3 Result: Adjusted gross estate $               5,982,100.00
4 Subtract sum of: (a) Marital deduction                                        -  
(b) Charitable deduction                    80,000.00
Total (                    80,000.00 )
5 Result: Taxable estate $               5,902,100.00
6 Add: Adjusted taxable gifts (post-1976) $                                        -  
7 Result: Estate tax base $               5,902,100.00
8 Compute: Tentative tax on estate tax base $   
9 Subtract sum of: (a) Gift tax payable on $                                        -  
post-1976 gifts
(b) Unified tax credit
Total ($                                        -   )
10 Result: Total death taxes $               5,902,100.00
11 Subtract: State death-tax credit ($ )
12 Result: Federal estate tax due $               5,902,100.00

Solutions

Expert Solution

S.No Particular Amount
1 Gross estate 6,200,000.00
2 Subtract sum of: (a) Funeral expenses 10,900.00
(b) Administrative expenses 82,000.00
© Debts 125,000.00
(d) Other expenses 0
Total -217,900.00
3 Result: Adjusted gross estate 5,982,100.00
4 Subtract sum of: (a) Marital deduction 0
(b) Charitable deduction 80000
Total -80000
5 Result: Taxable estate 5,902,100.00
6 Add: Adjusted taxable gifts (post-1976) 0
7 Result: Estate tax base 5,902,100.00
8 Compute: Tentative tax on estate tax base 2046535
9 Subtract sum of: (a) Gift tax payable on post-1976 gifts 0
(b) Unified tax credit 1772800
-1772800
10 Result: Total death taxes 273735
11 Subtract: State death-tax credit 0
12 Result: Federal estate tax due 273,735.00
Note:
1) In 2012: Tentative tax rate on estate over $ 5,00,000 is 155800+ 34% of estate value above 500000
2) Unified tax credit available in 2012 is $ 1772800

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