Question

Banele had a taxable estate of $17.3 million when they died this year. Calculate the amount of estate tax due (if any) under the following alternatives. (Refer to Exhibit 25-1 and Exhibit 25-2.) Note: Enter your answers in dollars and not in millions of dollars. a. Banele's prior taxable gifts consist of a taxable gift of $1 million in 2005 . b. Banele's prior taxable gifts consist of a taxable gift of $1.5 million in 2005 . Banele had a taxable estate of $17.3 million when they died this year. Calculate the amount of estate tax due (if any) under the following alternatives. (Refer to Ex Note: Enter your answers in dollars and not in millions of dollars. c. Banele made a $1 million taxable gift in the year prior to their death.

Answer 1

The estate tax calculation involves summing the value of Banele's taxable estate and any prior taxable gifts, subtracting the exemption amount, and applying the relevant tax rate to compute the estate tax due. The exact tax amount can only be determined with the current year's exemption and rates.

Step-by-step explanation:

The calculation of estate tax due is based on the value of the entire estate and prior taxable gifts. Assuming the current exemption amount is $12.06 million as stated in the provided information for 2022, Banele's estate of $17.3 million exceeds this threshold and thus incurs estate tax. Taxable gifts made by Banele during their lifetime are also considered part of the taxable estate, potentially increasing the estate tax due.

For each scenario, the steps to calculate the estate tax due would involve:

1. Adding any prior taxable gifts to the value of the estate at the time of death.
2. Subtracting the exemption amount ($12.06 million for 2022) from the combined total.
3. Applying the estate tax rate to the remaining amount to determine the estate tax due.

A complete calculation would require the current year's exemption amount and tax rates, as well as any applicable credits or deductions.