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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

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

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