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Jones is seriously ill and has $4.20 million of property that he wants to leave to his four children. Jones is considering making a
Jones is seriously ill and has $4.20 million of property that he wants to leave to his four children. Jones is considering making a current gift of the property (rather than leaving the property to pass through a will). Assume all of his exemption equivalent was used and any taxable transfers will be subject to the highest transfer tax rate. (Refer to Exhibit 25-1 and Exhibit 25-2.) a-1. Determine how much gift tax Jones will owe if the transfers are made now. a-2. If Jones makes a current gift, how much estate tax will be saved if Jones dies after three years, during which time the property appreciates to $5.1 million? Note: For all requirements, enter your answers in dollars and not in millions of dollars. a-1. Amount of gift tax a-2. Amount of estate tax savings Year of Transfer Gift Tax Estate Tax 1986 $500,000 $500,000 1987-1997 1998 600,000 600,000 625,000 625,000 1999 650,000 650,000 2000-2001 675,000 675,000 2002-2003 1,000,000 1,000,000 2004-2005 1,000,000 1,500,000 2006-2008 1,000,000 2,000,000 2009-2010* 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 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 40 1,000,000
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