Question

​Morgan, a​ widow, recently passed away. The value of her assets at the time of death was ​$9 comma 647 comma 000. The cost of her funeral was ​$12 comma 966​, while estate administrative costs totaled ​$30 comma 257. As stipulated in her​ will, she left ​$931 comma 879 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 2017​, how much of her estate would be subject to​ taxation? e. Calculate the estate tax liability.

Answer 1

Answer:

Check the explanation

Explanation:

          Particulars                                                  Amount in $

A.  Gross Estate                                                      8600000

Less: deductions (funeral & administrative tax)    70000

B.  Taxable estate                                                   8530000

 

c.  Gift-Adjustable Taxable estate value:  

       Taxable estate                                                 8530000

Charities will be deucted from tax calculation      1000000

         gift-adjusted taxable estate value                  7530000

D.  estate would be subject to tax                         7530000

E.  estate tax liability Calculated below                 876000

 

For estate more than 53400000 tax will be charged at 40%  

So, same is 40% of excess on                       53400000  

Taxable estate before threshold after deducting 53400000 from estate that would be subject to Tax  2190000

Tax at 40% of excess value                           876000

 

Answer 2

Answer:

a) $9,647,000

b) $8,671,898

c) $8,671,898

d) $8,671,898

e) $1,332,759.20

Explanation:

A) Morgan's gross estate:

Gross estate is will be the value of Morgan's asset at the time she passed away.

Thus, gross estate = $9,647,000

b) Value of her taxable estate:

Morgan's taxable estate will be yhe the portion of her net assets and property that are taxeable after she passed away.

Her taxable estate will be:

Gross estate :______ $9,647,000

Funeral expenses:___-$12,966

Administrative costs:__-$30,257

Her adjusted gross estate = ($9,647,000-$12,966-$30,257) $9,603,777

Total taxable estate =

Adjusted gross estate: $9,603,777

Martial deduction:____-$0

Charitable deduction:__-$931,879

Taxable estate = $8,671,898 ($9,603,777-$931,879)

c) her​ gift-adjusted taxable estate​ value:

gift-adjusted taxable estate​ value = Taxable estate - Adjusted taxable gifts.

Her adjusted taxable gift is $0.

Therefore, her​ gift-adjusted taxable estate​ value would be

= $8,671,898 - $0

= $8,671,898

d) Assuming she died in 2017​, how much of her estate would be subject to​ taxation?

Her taxable estate assuming she died in 2017, would be:

Her taxable estate will be:

Gross estate :______ $9,647,000

Funeral expenses:___-$12,966

Administrative costs:__-$30,257

Her adjusted gross estate = ($9,647,000-$12,966-$30,257) $9,603,777

Total taxable estate =

Adjusted gross estate: $9,603,777

Martial deduction:____-$0

Charitable deduction:__-$931,879

Taxable estate = $8,671,898 ($9,603,777-$931,879)

e)for the estate tax liability.

Estate tax liability = (Taxable estate - fair market value) × 40%

Whee fair market value = $5,340,000

Estate tax liability = ($8,671,898-$5,340,000) *40%

= $1,332,759.20