Computation of Federal Estate Tax Due

 

Determination of the Gross Estate

  

valuation at date of death (§ 20311a)

alternate valuation method (§ 2032)

special use valuation method (§ 2032A)

Property interest owned after death including under § 2034 the surviving spouse's dower or courtesy interest or an estate in lieu thereof (§ 2033)

Transfers within 3 years of death (§ 2035)

Transfers with retained life estates (§ 2036)

Transfers conditioned on surviving decedent (§ 2037)

Revocable Transfers (§ 2038)

Annuities (§ 2039)

Jointly-owned property (§ 2040)

Property subject to general power of appointment (§ 2041)

Life insurance on decedent's life (§ 2042)

Qualified Terminable Interest Property (§ 2044)

Disclaimers (§ 2046)

= Total gross estate

 

Deductions from the gross estate

  

- Funeral debts, expenses and taxes (§ 2053)

- Losses incurred during administration (§ 2054)

- Unlimited charitable deductions (§ 2055)

- Unlimited marital deductions (§ 2056)

- State Death Taxes for persons dying after 2004 (§ 2058)

= Total Deductions from the gross estate

 

Taxable Estate, § 2051

  

Gross estate

- Deductions

= § 2051 Taxable esate

 

Tax Base 

 

Taxable esate (§ 2051)

+ Adjusted taxable gifts

= Tax Base

 

Tentative Tax Before Credits 

 

Tax Base

Opens internal link in current windowApply Tax Rates (§ 2001)

= Tentative before Credits

 

 Federal Estate tax due before surcharge

  

Tentative before Credits

- Opens internal link in current windowUnified Credit (§ 2010)

- State death tax credit for decedents dying before 2005 (§ 2011)

- Gift tax credit on pre-1977 gifts (§ 2012)

- Credit for tax on prior transfer (§ 2013)

- Foreign death tax credit (§ 2014)

- Credit for death tax on remainder (§ 2015)

 

Federal Estate tax due 

 

Federal Esate Tax Due before surcharge

+ Phaseout of graduated rates and unified credit

 

Example

A wife dies in 2008 and has assets valued at $ 3 Million. Her Husband pre-deceased his wife. The funeral debts and other costs / taxes amount to $ 300.000,00. The beneficiaries have received donations during lifetime of the decedent amounting to $ 1,000,000 (gift tax paid).

 

The federal estate tax calculation would be:

 

Gross Estate

3,000,000

Deductions from Gross Estate

- 300,000

Taxable Estate

= 2,700,00

Ajusted taxable Gifts

+ 1,000,000

Tax Base

= 3,700,000

Tentative Tax Before Credits (apply Opens internal link in current windowTax Rates = 780,800 + 48 % of  1,700,000)

= 1.596800

Deduct Opens internal link in current windowunified Credit (2008: 780,800)

- 816,000

Maximum tax rate (2008: 45 %)

= 765,000

Federal Estate Tax Due

 =765,000

 

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2009 © Jan-Hendrik Frank (Rechtsanwalt und Fachanwalt für Erbrecht)