In: Accounting
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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. |
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| 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 | ||||||
| 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 | |||