Question

Clay, who was single, died in 2015 and has a gross estate valued at $8,500,000. six months after his death, the gross assets are valued at $9,000,000. the estate incurs funeral and admin expenses of $125,000. Clay had debts amounting to $150,000 and bequeathed all of his estate to his children. During his life, lay made no taxable gifts.

Required:
A) What is the amount of Clay’s taxable estate?B) What is the tax base for computing Clay’s estate tax?

Answer 1

The amount of Clay’s taxable estate is $8,225,000.

The tax base for computing Clay’s estate tax is $8,225,000.

Step-by-step explanation:

a)

Particulars Amount($)

Gross Estate 8,500,000

Less: Funeral and Admin. Expenditures (125,000)

Debts (150,000)

Taxable Estate 8,225,000

The amount of Clay's taxable estate is: $8,225,000.

b)

The base for computing the estate tax is the fair market value of the estate at the time of death minus funeral and administrative expenses which is $8,225,000.