Question

The date of death for a widow was 2017. If the estate was valued at $7.36 million and the estate was taxed at 40 percent, what was the heir's tax liability? (Enter your answer in dollars not in millions.) Heir's tax liability

Answer 1

The heir's tax liability for an estate valued at $7.36 million, after applying a 40% tax rate to the amount above the estate tax exemption of $5.43 million (assumed for 2017), would be $772,000.

Step-by-step explanation:

To calculate the heir's tax liability for an estate valued at $7.36 million with a tax rate of 40%, we need to determine if the estate's value exceeds the estate tax exemption threshold. According to the Center on Budget and Policy Priorities, in 2015, the exemption limit was $5.43 million. Since the date of death is 2017, the exemption amount may have been different, but for this calculation, we’ll assume it is the same.

Here's how to calculate the tax liability:

Subtract the exemption limit from the total estate value: $7,360,000 - $5,430,000 = $1,930,000. This is the taxable amount.

Multiply the taxable amount by the tax rate: $1,930,000 * 40% = $772,000.

Therefore, the heir's tax liability would be $772,000.

Answer 2

zero

Step-by-step explanation:

The inheritance tax is paid by the estate. The heirs have no tax liability on the amount inherited.