Diego is a single individual who owns a life insurance policy worth $1.526 million that will be worth $8 million upon his death. This year Diego transferred the policy and all incidents of ownership to an irrevocable trust that pays income annually to Diego's two children for 15 years and then distributes the corpus to the children in equal shares. Assume that Diego has made only one prior taxable gift of $12 million in January of 2018. (Refer to Exhibit 25-1 and Exhibit 25-2.)

Required:

Calculate the amount of gift tax due (if any) on the transfer of the insurance policy.

Diego died unexpectedly this year after transferring the policy. At the time of death, Diego's probate estate was $25 million, to be divided in equal shares between Diego's two children. Calculate the amount of cumulative taxable transfers for estate tax purposes.

Note: For all requirements, enter your answers in dollars and not in millions of dollars.

EXHIBIT 25-1 Unified Transfer Tax Rates* *The applicable credit and exemption are zero for estates that opted out of the estate tax in 2010. EXHIBIT 25-2 The Exemption Equivalent / Applicable Exclusion Amount \begin{tabular}{|l|c|c|} \hline \multicolumn{1}{|c|}{ Year of Transfer } & Gift Tax & Estate Tax \\ \hline 1986 & $500,000 & $500,000 \\ \hline 19871997 & 600,000 & 600,000 \\ \hline 1998 & 625,000 & 625,000 \\ \hline 1999 & 650,000 & 650,000 \\ \hline 20002001 & 675,000 & 675,000 \\ \hline 20022003 & 1,000,000 & 1,000,000 \\ \hline 20042005 & 1,000,000 & 1,500,000 \\ \hline 20062008 & 1,000,000 & 2,000,000 \\ \hline 20092010 & 1,000,000 & 3,500,000 \\ \hline 2011 & 5,000,000 & 5,000,000 \\ \hline 2012 & 5,120,000 & 5,120,000 \\ \hline 2013 & 5,250,000 & 5,250,000 \\ \hline 2014 & 5,340,000 & 5,340,000 \\ \hline 2015 & 5,430,000 & 5,430,000 \\ \hline 2016 & 5,450,000 & 5,450,000 \\ \hline 2017 & 5,490,000 & 5,490,000 \\ \hline 2018 & 11,180,000 & 11,180,000 \\ \hline 2019 & 11,400,000 & 11,400,000 \\ \hline 2020 & 11,580,000 & 11,580,000 \\ \hline 2021 & 11,700,000 & 11,700,000 \\ \hline \end{tabular}