Elfrieda Roth who died in 2017 made lifetime taxable gifts o

Elfrieda Roth, who died in 2017, made lifetime taxable gifts of $1.5 million. She paid no gift tax out of pocket as a result of these transfers. She was survived by her husband and daughter. Pertinent facts about her estate are: she had a gross estate of $6,477,000 . her funeral expenses were $24,000 her estate administrative expenses were $100,000 . she had outstanding debts of $26,000 she passed $1,195,000 of her property to her husband her estate paid $50,000 in state death taxes Which one of the following amounts most closely approximates the net federal estate tax liability for Elfrieda\'s estate? $38,700 $220,550 $296,800 $436,800

Solution

Gross Estate $6,477,000 Less: Funeral expenses $24,000 Estate administrative expenses $100,000 Property passed to her husband $1,195,000 Outstanding debts $26,000 State death taxes $50,000 Total deductions $1,395,000 Net estate $5,082,000 Add: Lifetime taxable gifts $1,500,000 Less: Unified Credit $5,490,000 Taxable estate $1,092,000 Tax on $1,000,000 $345,800 Tax on remaining $92000 (1092000-1000000) @ 40% $36,800 Total tax liability $382,600