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 |
= Tentative before Credits |
Apply Tax Rates (§ 2001)
Federal Estate tax due before surcharge
Tentative before Credits |
- 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 | = 1.596800 |
Deduct | - 816,000 |
Maximum tax rate (2008: 45 %) | = 765,000 |
Federal Estate Tax Due | =765,000 |