Question

Calculating the Estate Tax. Joel and Rachel are both retired. Married for 50 years, they’ve amassed an estate worth $2.4 million. The couple has not trusts or other types of tax-sheltered assets. If Joel or Rachel dies in 2008, how much federal estate tax would the surviving spouse have to pay, assuming that the estate is taxed at the 45 percent rate?

Answer 1

federal tax which has to be paid by the spouse is equal to $1,080,000

Explanation:

estate worth of Joel and Rachel = $2.4 million

= $2,400,000

estate is taxed at = 45 %

the amount of tax which spouse have to pay is

=
`(45)/(100)* 2,400,000`

= $1,080,000

hence the federal tax which has to be paid by the spouse is equal to $1,080,000

Answer 2

If either Joe or Rachel dies in 2008, there will be no federal estate tax liability. There is an unlimited marital deduction for the surviving spouse. Only when both die will there be an estate tax liability over the $5.12 million exemption amount.

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