Harold and Maude were married and lived in a common-law state. Maude died in 2018 with a taxable estate of $27.40 million and left it all to Harold. Maude's executor filed a timely estate tax return claiming the marital deduction for the property left to Harold including a valid portability election. Harold died this year, leaving the entire $27.40 million to their three children.(Refer to Exhibit 25-1 and Exhibit 25-2.)

Calculate how much estate tax is due from Harold's estate under the following two alternatives.

Assume that neither Harold nor Maude had made any taxable gifts prior to this year.

Assume that Harold and Maude each made a $1 million taxable gift in 2011 and offset the gift tax at that time with the applicable credit.

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 / Applicable Exclusion Amount

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
2021	11,700,000	11,700,000
2022	12,060,000	12,060,000