Question

Will is single and owns the following:
House, solely owned, FMV of $3,200,000
Auto, solely owned, FMV of $25,000
Stock Portfolio, solely owned, FMV $6,000,000
Bank account, JTWROS with his daughter, FMV $1.5 Million
401k vested account balance of $3.5 million, with his son being the beneficiary.

If Will died today (2018) and if final expenses and debts are $225,000 what would be the value of Will's taxable estate? How much will Will's estate owe taxe? Please show your work.

Answer 1

As decided in Estate of Eldred v. Commissioner, T.C. Memo 1989-293 (T.C. 1989), taxable estate or adjusted gross estate refers to total value of a decedent’s property after deducting expenses such as :

1.administration expenses,

2.funeral expenses,

3.creditor’s claims, and

4.casualty losses.

Thus taxable estate shall be $ 14,225,000 - $ 225,000 = $ 14,000,000.

For 2018, the taxable estate after exemption is $2,800,000, the federal estate tax is $1,120,000, and the after tax value is $12,880,000.