9. Computing the federal transfer tax - Practice 2 Kenji Taylor died in 2012, leaving an estate of $24,000,000. Konji's wife died in 2009. In 2009, Kenji gave his son property that resulted in a taxable gift of $5,000,000 and upon which Kenji paid $1,100,000 in transfer taxes. Kenji had made no other taxable gifts during his life, Kenji's will provided a charitable bequest of $750,000 to his church Exhibits - Tax schedules and credits Unified Credits and Applicable Exclusion Amounts for Estates and Gifts: Exhibit 158 - Federal Unified Transfer Tax Rates Exhibit 15.7 Unified Tax Credit- Estates Year Applicable Exclusion Amount- Estates $2,000,000 2008 Unified Tax Credit- Gifts $345,800 $345,800 $330,000 Applicable Exclusion Amount --Gifts $1,000,000 $1,000,000 $1,000,000 2009 $3,500,000 $780,800 $1,455,800 Estate tax repealed for 2010 $1,730,000 2010 2011 2012 2013 $1,772,800 $2,045,800 $2,081,800 32,117,800 $5,000,000 $5,120,000 $5,250,000 $5,340,000 $5,430,000 $5,340,000 $5,490,000 $1,730,000 $1,772,800 $2,045,800 $2,081,800 $5,000,000 $5,120,000 $5,250,000 $5,340,000 $5,430,000 2014 2015 2016 $5,340,000 52,125,800 $2,141,000 $2,117,000 $2,125,000 $2,141,800 54.417.800 2017 2018 $4,417,800 $5,490,000 $11,100,000 $11,180,000 h Souro Internal Revenue Service Taxable Estate Value Tentative Tax More Than But Not More Than Base Amount + Percent On Excess Over $0 10,000 $0 10,000 1,800 20% $10,000 20,000 40,000 20,000 3,800 22% 20,000 60,000 8,200 24% 40,000 60,000 40,000 60,000 80,000 13,000 26% 80,000 100,000 18,200 28% 80,000 100,000 150,000 23,800 30% 100,000 150,000 250,000 38,800 32% 150,000 250,000 500,000 70,800 34% 250,000 500,000 750,000 155,800 37% 500,000 750,000 750,000 1,000,000 248,300 39 1,000,000 345,800 40 1,000,000 Source: Internal Revenue Code, Section 2001. Use the following worksheet to calculate the federal estate tax due on Kenji Taylor's estate. (Hint: Enter a value of so for any Use Exhibit 15.7 to determine the appropriate unified tax credit. Use Exhibit 15.8 to calculate the tentative tax.) Name: Kenji Computation Line Total Amount 1 2 Subtract sum of: Computing Federal Estate Tax Due Date: 11/30/2012 Item Amount Gross estate (a) Funeral expenses $0.00 (b) Administrative expenses $0.00 (c) Debts $0.00 (d) Other expenses $0.00 Total: Adjusted gross estate (a) Marital deduction $0.00 (b) Charitable deduction S Total: (S0.00) 3 Result: 4 Subtract sum of: 5 Result: Taxable estate S 6 Add: Adjusted taxable gifts (post-1976) 7 7 Result: 8 Compute: Subtract sum of: 9 S Estate tax base Tentative tax on estate tax base (a) Gift tax payable on post-1976 gifts (b) Unified tax credit Total: Total estate taxes Other credits S 10 Result: 11 Subtract: ($0.00) 12 Result: Federal estate tax due