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?

Question

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Lauren Burch

30 March, 16:11

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?

+1

Answers (1)

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Destinee Pineda · 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.

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.