Mr. Jackson died on June 19 when the total FMV of his property was $23 million and his debts totaled $2.789 million. His executor paid $23,000 funeral expenses and $172,000 accounting and legal fees to settle the estate. Mr. Jackson bequeathed $500,000 to the First Lutheran Church of Milwaukee and $1 million to Western Wisconsin College. He bequeathed his art collection (FMV $6.4 million) to his wife and the residual of his estate to his three children. Assume the taxable year is 2022. *For 2022*

Required:

Compute Mr. Jacksons taxable estate.

23 mil - 2.789 mil - 23,000 - 172,000 - 500,000 - 1 mil - 6.4 mil = 12,116,000

Compute the estate tax payable by Mr. Jacksons executor if Mr. Jackson made no taxable gifts during his lifetime.

(12,116,000 - 12,060,000 (tax for 2022) )*.4 = 22400

Compute the estate tax payable by Mr. Jacksons executor if Mr. Jackson made a substantial taxable gift in 2011 and used $5 million of his lifetime transfer tax exclusion to reduce the amount on which gift tax was owed to zero.

12,116,000 - (12,060,000 - 5,000,000 (life time transfer tax))*.4 = 2,022,400