90.2K

Verified Solution

Link Copied!

IRC $2503$ Annual exclusion for a gift of $$10,000$ indexed $($$$11,000$ in $2002-2005,$ $$12,000$ in $2006-2008,$ $$13,000$ in $2009-2012,$ $$14,000$ in $2013-2017,$ $$15,000$ in $2018-2021,$ $$16,000$ for $2022,$ $$17,000$ in $2023$ and $$18,000$ in $2024)$ per done.

In June $2022$ Wilma gave Pebbles a gift of real estate worth $$15,516,000.($There were no prior gifts$).$

Total CY gross gifts

Less annual exclusions and deductions

Total taxable gifts

Calculate tentative tax on total taxable gifts

Less Unified Credit $($UC$)$

Current gift tax

Wilma died in January of $2024.$ At her death she had the following assets.

$$ Chase checking account $$100,000$

$$ Del Mar residence $$10,000,000$ with a mortgage of $2,000,000$

$$ Joint account with Pebbles, she contributed all the money, $$400,000.$

$$ California tax exempt municipal bond $$100,000$

$$ In January of $2020$ she transferred her $$5,000,000$ Life insurance policy to an Irrevocable Life Insurance trust $($ILIT$).$ On the Beneficiary Designation form Pebbles is the designated beneficiary.

$$ Wilma was a beneficiary of a trust created by her late uncle John. Pursuant to this trust, she was entitled to income from this trust for her life. The value of the trust at her death was $$5,000,000.$

In her will, Wilma left $$1,000,000$ to her favorite charity. Pebbles receives the remainder of Wilma$$s assets.

Please determine which assets are included in Wilma$$s estate and calculate Wilma$$s estate tax. Make sure you do not forget to cumulate it with any prior year gift$($s$).$

HINT: Section $2035$ may be applicable here!

Assets included in W$$s estate

Any additions to the estate?

Gross estate

Less total deduction $($debt$,$ admin, marital, charit$)$

Taxable estate

Plus Adjusted taxable gifts

Estate tax base

Calculate tentative estate tax

Less gift taxes actually paid since $1976$

Less UC $($in the entirety for the year of death$)$

Federal estate tax

Answer & Explanation Solved by verified expert

See Answer