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9. Computing the federal transfer tax - Practice 2 Aa Aa Lester Midgley died in 2012, leaving an estate of $21,000,000. Lester's wife died in 2009. In 2009, Lester gave his son property that resulted in a taxable gift of $4,000,000 and upon which Lester paid $950,000 in transfer taxes. Lester had made no other taxable gifts during his life. Lester's will provided a charitable bequest of $500,000 to his synagogue. Use the following worksheet and Exhibits 15.7 and 15.8 to determine the federal transfer tax on Lester Midgley's estate. Enter a value of $0 for any line that does not apply. Name: Lester Midgley Line Computation Computing Federal Estate Tax Due Date: 11/30/2012 Item Amount Total Amount 1 Subtract sum of: N $0 $0 $0 $0 3 Result: Subtract sum of: 4 $0 $500,000 5 Gross estate (a) Funeral expenses (b) Administrative expenses (c) Debts (d) Other expenses Total: Adjusted gross estate (a) Marital deduction (b) Charitable deduction Total: Taxable estate Adjusted taxable gifts (post-1976) Estate tax base Tentative tax on estate tax basea (a) Gift tax payable on post-1976 gifts (b) Unified tax credito Total: Total estate taxes Other credits Federal estate tax due Result: Add: Result: Compute: Subtract sum of: 6 7 8 9 $950,000 $1,772,800 10 11 Result: Subtract: Result: 12 "Use Exhibit 15.7 to calculate the tentative tax. Use Exhibit 15.8 to determine the appropriate unified tax credit. Use the following dropdown menus to obtain the relevant tax schedules and credits: Exhibit 15.7 Federal Unified Transfer Tax Rates Tentative Tax Taxable Estate Value More Than But Not More Than Base Amount + Percent On Excess Over 20% 22% 24% $0 10,000 20,000 40,000 60,000 80,000 100,000 150,000 250,000 500,000 10,000 20,000 40,000 60,000 80,000 100,000 150,000 250,000 500,000 26% $0 1,800 3,800 8,200 13,000 18,200 23,800 38,800 70,800 155,800 28% $10,000 20,000 40,000 60,000 80,000 100,000 150,000 250,000 500,000 30% 32% 34% 37% Exhibit 15.8 Unified Credits and Applicable Exclusion Amounts for Estates and Gifts X Unified Tax Credit-Estates Applicable Exclusion Amount-Estates Unified Tax Credit-Gifts Applicable Exclusion Amount-Gifts Year 2006 2007 $2,000,000 $2,000,000 $2,000,000 $3,500,000 2008 2009 $780,800 $780,800 $780,800 $1,455,800 Estate tax repealed for 2010 $1,730,800 $1,772,800 $2,045,800 $345,800 $345,800 $345,800 $345,800 $330,800 $1,730,800 $1,772,800 $2,045,800 $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 $5,000,000 $5,120,000 $5,250,000 2010 2011 2012 $5,000,000 $5,120,000 $5,250,000 2013