Jones Is senously Ill and has $6 million of property that he wants to leave to his four children. He is considering making a current gift of the property (rather than leaving the property to pass through his wll, Assuming any taxable transfer will be subject to the highest transfer tax rate. (Refer to Exhibit 25-1 and Exhibit 25-2) Required: a. Determine how much gift tax Jones will owe if he makes the transfers now b. If he makes a current gift, how much estate tax will Jones save if he dies after three years, during which tme the propery appreciates to $6.8 milion? (For all requirements, enter your answers in dolilars and not in millions of dollars.) 3 Answer is complete but not entirely correct. s 2.736.000 Amount of gift tax b Amount of estate tax savings s 344.000 EXHIBIT 25-1 Unified Transfer Tax Rates Tax Base Equal to or Over Not Over Tentative Tax Plus of Amount Over 0 10,000 20,000 40,000 60,000 80,000 100,000 150,000 250,000 500,000 750,000 1,000,000 18% 20 10,000 20,000 40,000 60,000 80,000 100,000 150,000 250,000 500,000 750,000 1,000,000 $ 10,000 20,000 40,000 60,000 80,000 100,000 50,000 250,000 500,000 750,000 1,000,000 0 1,800 3,800 8,200 13,000 18,200 23,800 38,800 70,800 155,800 248,300 345,800 24 26 28 30 32 34 37 39 40 The applicable credit and exemption is zero for estates that opted out of the estate tax in 2010 Year of Transfer Glit Tax Estate Tax 1986 s 500.000 S 500,000 1987-1997 1998 1999 2000-2001 2002-2003 2004-2005 2006-2008 600,000 600,000 625,000 625,000 650.000 675,000 1,000,000 1,000.000 1,000,000 1,000,000 5.000.000 650.000 675,000 1,000,000 1,500.000 2.000,000 3.500.000 5,000.000 2009-2010* 2011 5.120.000 5.120, 2012 2013 2014 2015 2016 5,250,000 5.340.000 5.430.000 5,450.000 5,490.000 11.130.000 5.250,000 5.340.000 5.430.000 5.450.000 5, 190.000 0 201