Question
Harold and Maude are married and live in a common-law state. Neither has made any taxable gifts and Maude owns (holds title to) all their
Harold and Maude are married and live in a common-law state. Neither has made any taxable gifts and Maude owns (holds title to) all their property. She dies with a taxable estate of $37.5 million and leaves it all to Harold. He dies several years later, leaving the entire $37.5 million to their three children. (Refer to Exhibit 25-1 and Exhibit 25-2.)
EXHIBIT 25-1 Unified Transfer Tax Rates*
Tax Base Equal to or Over | Not Over | Tentative Tax | Plus | of Amount Over |
---|---|---|---|---|
$ 0 | $10,000 | $ 0 | 18% | $ 0 |
10,000 | 20,000 | 1,800 | 20 | 10,000 |
20,000 | 40,000 | 3,800 | 22 | 20,000 |
40,000 | 60,000 | 8,200 | 24 | 40,000 |
60,000 | 80,000 | 13,000 | 26 | 60,000 |
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 | 1,000,000 | 248,300 | 39 | 750,000 |
1,000,000 | 345,800 | 40 | 1,000,000 |
*The applicable credit and exemption are zero for estates that opted out of the estate tax in 2010.
EXHIBIT 25-2 The Exemption Equivalent
Year of Transfer | Gift Tax | Estate Tax |
---|---|---|
1986 | $500,000 | $500,000 |
19871997 | 600,000 | 600,000 |
1998 | 625,000 | 625,000 |
1999 | 650,000 | 650,000 |
20002001 | 675,000 | 675,000 |
20022003 | 1,000,000 | 1,000,000 |
20042005 | 1,000,000 | 1,500,000 |
20062008 | 1,000,000 | 2,000,000 |
20092010* | 1,000,000 | 3,500,000 |
2011 | 5,000,000 | 5,000,000 |
2012 | 5,120,000 | 5,120,000 |
2013 | 5,250,000 | 5,250,000 |
2014 | 5,340,000 | 5,340,000 |
2015 | 5,430,000 | 5,430,000 |
2016 | 5,450,000 | 5,450,000 |
2017 | 5,490,000 | 5,490,000 |
2018 | 11,180,000 | 11,180,000 |
2019 | 11,400,000 | 11,400,000 |
2020 | 11,580,000 | 11,580,000 |
*The applicable credit and exemption are zero for taxpayers who opt out of the estate tax in 2010.
Calculate how much estate tax is due from Harolds estate. (Enter your answer in dollars and not in millions of dollars.)
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