Santiago Hernandez, was 65 when he retired in 2014. Maria, his wife of 40 years, passed away the next year. Her will left everything to Santiago. Although Maria's estate was valued at $2,250,000, there was no estate tax due because of the 100 percent marital deduction. Their only child, Samuel, is married to Luna. They have four children, two in college and two in high school. In 2015, Santiago made a gift of Microsoft stock worth $260,000 jointly to Samuel and Luna. Because of the two $14,000 annual exclusions and the unified credit, no gift taxes were due. When Santiago died in 2018, his home was valued at $850,000, his vacation cabin was valued at $500,000, his investments in stocks and bonds were valued at $1,890,000, and his pension funds were worth $650,000 (Samuel was named beneficiary). Santiago also owned a life insurance policy that paid proceeds of $720,000 to Samuel. He left $60,000 to his church and $25,000 to his high school to start a scholarship fund in his wife's name. The rest of the estate was left to Samuel. Funeral costs were $13,000. Debts were $90,000 and miscellaneous expenses were $25,000. Attorney and accounting fees came to $37,000. Use Worksheet 15.1 to guide your estate tax calculations as you complete these exercises.

File Home Insert Page Layout Formulas Data Review B3 G Name Date 5 Line Computation Item Amount Total Amount 8 1 Os estate 3 10 2 5 12 Subtract sum of (a) Funeral expenses b) Administrative expenses 19 Debes 16 Idy Other expenses Total 20 3 Result Adjusted grossestate Subtract sumoffa- Marital deduction 4 [bChantable deduction Total 30 Add Tandble estate Adjusted tobie gifs post-1975) HE I be 7 9 Compute Tento one to be Subtract tempayable DOID-1975 gifts 818 FALSE Sunfed tas creat Tom 10 Retut Tamerate tor' Chat Widerotettu TA 49 ob 15.5 tontit 50 Used opiero "Notten 51 for the W 15.2 Type here to search EXHIBIT 15.8 Federal Unified Transfer Tax Rates This unified rate schedule defines the amount of federal gift and estate taxes that estates of various sizes would have to pay it incorporates the rates passed in the American Taxpayer Relief Act of 2012, signed into law on January 2, 2013 Estates and gifts under the exclusion amount pay no federal tax. The estate exclusion amount increased annually from $2,000,000 in 2006 to $11,180,000 in 2018 (see Exhibit 15.6). From 2009 to 2018, the top tax rates decreased from 45 percent to 40 percent TAXABLE ESTATE VALUE TENTATIVE TAX More Than But Not More Than Base Amount + Percent On Excess Over 5 0 $ 10,000 S 0 10,000 20,000 1.800 2096 S 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 34 250,000 500,000 750.000 155.000 37 500.000 750,000 1.000.000 248 300 39 750,000 1,000,000 345.800 10 1,000,000 co EXHIBIT 15.7 Unified Credits and Applicable Exclusion Amounts for Estates and Gifts On January 2, 2013, the American Taxpayer Relief Act of 2012 was signed into law. The major features of the Act were to make the estate tax rate 40 percent , to make the annual adjustment to the applicable exclusion amount permanent, and to make the portability of the unified transfer tax credit permanent The Tax Cut and Jobs Act of 2017 increased the applicable exclusion amount to $11,180,000. This table shows the recent history of the unified credits and applicable exclusion amounts. Applicable Exclusion Amount-Estates $2,000,000 $3,500,000 Year 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Unified Tax Credit-Estates $780,800 $1,455,800 Estate tax repealed for 2010 $1,730,800 $1,772,800 $2,045,800 $2,081,800 52,117800 $2.125,800 52.141.800 54.417,800 $5,000,000 $5,120,000 $5,250.000 h 55,340,000 35.430,000 55,340.000 $5.490,000 ST. 180,000 Unified Tax Credit-Gifts $345,800 $345.800 $330.800 $1,730,800 $1.772,800 $2,045,800 $2,081.800 $2.117800 $2.125,800 $2.141:800 $4.417800 Applicable Exclusion Amount-Gifts $1,000,000 $1,000,000 $1.000.000 $5,000,000 $5.120,000 $5,250,000 $5,340,000 55.430.000 $5,340.000 $5,400,000 $11.180,000 File Home Insert Page Layout Formulas Data Review B3 G Name Date 5 Line Computation Item Amount Total Amount 8 1 Os estate 3 10 2 5 12 Subtract sum of (a) Funeral expenses b) Administrative expenses 19 Debes 16 Idy Other expenses Total 20 3 Result Adjusted grossestate Subtract sumoffa- Marital deduction 4 [bChantable deduction Total 30 Add Tandble estate Adjusted tobie gifs post-1975) HE I be 7 9 Compute Tento one to be Subtract tempayable DOID-1975 gifts 818 FALSE Sunfed tas creat Tom 10 Retut Tamerate tor' Chat Widerotettu TA 49 ob 15.5 tontit 50 Used opiero "Notten 51 for the W 15.2 Type here to search B3 Name Date 6 Line Computation tem Amount Tocal Amount 1 Gross estate 10 2 Subtract sum of: (a) Funeral expenses (b) Administrative expenses (c) Debts (d) Other expenses 14 18 Total 20 99 999 3 Result: Adjusted gross estate Subtract sum of: (a) Marital deduction (b) Charitable deduction 24 26 Total 28 5 Result: Taxable estate 30 5 Add: Adjusted towable gifts (post-1978) 5 32 7 Result Estate tax base $ Compute: Tentative for onestote base 9 56 57 Subtract sum of (a) Gift tax payable on post-1976 ifts (b) United tax credit 19 Tota 3 10 Total estate 5 Subtract 7 3 "Us Exhibe 15.8 to calculate the tentative Us Exhibit 15.1 to determine the sppropriate widt WS. 15:2 File Home Insert Page Layout Formulas Data Review B3 G Name Date 5 Line Computation Item Amount Total Amount 8 1 Os estate 3 10 2 5 12 Subtract sum of (a) Funeral expenses b) Administrative expenses 19 Debes 16 Idy Other expenses Total 20 3 Result Adjusted grossestate Subtract sumoffa- Marital deduction 4 [bChantable deduction Total 30 Add Tandble estate Adjusted tobie gifs post-1975) HE I be 7 9 Compute Tento one to be Subtract tempayable DOID-1975 gifts 818 FALSE Sunfed tas creat Tom 10 Retut Tamerate tor' Chat Widerotettu TA 49 ob 15.5 tontit 50 Used opiero "Notten 51 for the W 15.2 Type here to search EXHIBIT 15.8 Federal Unified Transfer Tax Rates This unified rate schedule defines the amount of federal gift and estate taxes that estates of various sizes would have to pay it incorporates the rates passed in the American Taxpayer Relief Act of 2012, signed into law on January 2, 2013 Estates and gifts under the exclusion amount pay no federal tax. The estate exclusion amount increased annually from $2,000,000 in 2006 to $11,180,000 in 2018 (see Exhibit 15.6). From 2009 to 2018, the top tax rates decreased from 45 percent to 40 percent TAXABLE ESTATE VALUE TENTATIVE TAX More Than But Not More Than Base Amount + Percent On Excess Over 5 0 $ 10,000 S 0 10,000 20,000 1.800 2096 S 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 34 250,000 500,000 750.000 155.000 37 500.000 750,000 1.000.000 248 300 39 750,000 1,000,000 345.800 10 1,000,000 co EXHIBIT 15.7 Unified Credits and Applicable Exclusion Amounts for Estates and Gifts On January 2, 2013, the American Taxpayer Relief Act of 2012 was signed into law. The major features of the Act were to make the estate tax rate 40 percent , to make the annual adjustment to the applicable exclusion amount permanent, and to make the portability of the unified transfer tax credit permanent The Tax Cut and Jobs Act of 2017 increased the applicable exclusion amount to $11,180,000. This table shows the recent history of the unified credits and applicable exclusion amounts. Applicable Exclusion Amount-Estates $2,000,000 $3,500,000 Year 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Unified Tax Credit-Estates $780,800 $1,455,800 Estate tax repealed for 2010 $1,730,800 $1,772,800 $2,045,800 $2,081,800 52,117800 $2.125,800 52.141.800 54.417,800 $5,000,000 $5,120,000 $5,250.000 h 55,340,000 35.430,000 55,340.000 $5.490,000 ST. 180,000 Unified Tax Credit-Gifts $345,800 $345.800 $330.800 $1,730,800 $1.772,800 $2,045,800 $2,081.800 $2.117800 $2.125,800 $2.141:800 $4.417800 Applicable Exclusion Amount-Gifts $1,000,000 $1,000,000 $1.000.000 $5,000,000 $5.120,000 $5,250,000 $5,340,000 55.430.000 $5,340.000 $5,400,000 $11.180,000 File Home Insert Page Layout Formulas Data Review B3 G Name Date 5 Line Computation Item Amount Total Amount 8 1 Os estate 3 10 2 5 12 Subtract sum of (a) Funeral expenses b) Administrative expenses 19 Debes 16 Idy Other expenses Total 20 3 Result Adjusted grossestate Subtract sumoffa- Marital deduction 4 [bChantable deduction Total 30 Add Tandble estate Adjusted tobie gifs post-1975) HE I be 7 9 Compute Tento one to be Subtract tempayable DOID-1975 gifts 818 FALSE Sunfed tas creat Tom 10 Retut Tamerate tor' Chat Widerotettu TA 49 ob 15.5 tontit 50 Used opiero "Notten 51 for the W 15.2 Type here to search B3 Name Date 6 Line Computation tem Amount Tocal Amount 1 Gross estate 10 2 Subtract sum of: (a) Funeral expenses (b) Administrative expenses (c) Debts (d) Other expenses 14 18 Total 20 99 999 3 Result: Adjusted gross estate Subtract sum of: (a) Marital deduction (b) Charitable deduction 24 26 Total 28 5 Result: Taxable estate 30 5 Add: Adjusted towable gifts (post-1978) 5 32 7 Result Estate tax base $ Compute: Tentative for onestote base 9 56 57 Subtract sum of (a) Gift tax payable on post-1976 ifts (b) United tax credit 19 Tota 3 10 Total estate 5 Subtract 7 3 "Us Exhibe 15.8 to calculate the tentative Us Exhibit 15.1 to determine the sppropriate widt WS. 15:2