Greta Cook died in 2018. Her gross estate was $11,290,000, administration expenses of $60,000 and an...
Greta Cook died in 2018. Her gross estate was $11,290,000, administration expenses of $60,000 and an adjusted taxable gifts were $20,000. Compute the estate tax liability.
I am able to find the estate tax base of $11,250,000, but I am unsure of how to find the tax liability.
Homework Answers
Given,
Gross Estate = $11290000
Administration expense = $60000
Adjusted taxable gifts = $20000
Net Estate = Gross Estate - Administration Expense
= 11290000 - 60000
= $11230000
For 2018, Estate tax exemption is $11180000. But the value of taxable gifts is subtracted to find out the final exemption.
Net exemption = 11180000 - 20000
= $11160000
Taxable Estate = Net estate - Net exemption
= 11230000 - 11160000
= $70000
For 2018, Estate Tax rate is 40%. Therefore,
Estate tax liability = 40% of $70000
= 0.4 X 70000
= $28000
Note: I have subtracted 20000 worth gifts from exemption. In stead if you add it in the net estate, still the result will be same. But as per the rule, the method as shown above is followed.
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