# John, who was single, died in 2018 and has a gross estate

John, who was single, died in 2018 and has a gross estate valued at \$8,525,000. Six months after his death, the gross assets are valued at \$9,050,000. The estate incurs funeral and administration expenses of \$145,000. John had debts totaling \$130,000 and bequeathed his estate to his children. During his life, John made no taxable gifts.

## John, who was single, died in 2018 and has a gross estate

Part 1:

John, who was single, died in 2018 and has a gross estate valued at \$8,525,000. Six months after his death, the gross assets are valued at \$9,050,000. The estate incurs funeral and administration expenses of \$145,000. John had debts totaling \$130,000 and bequeathed his estate to his children. During his life, John made no taxable gifts.

Firstly, What is the amount of John’s taxable estate?
Secondly, What is the tax base for computing John’s estate tax?
Thirdly, What is the amount of estate tax owed if the tentative estate tax (before credits) is \$3,235,800?
Fourthly, Alternatively, if, six months after his death, the gross assets in John’s estate declined in value to \$7,500,000, can the administrator of John’s estate elect the alternate valuation date? What are the important factors that the administrator should consider as to whether the alternate valuation date should be elected?

Part 2:

Gift Joan, a married taxpayer, makes the following gifts during the current year (2018): \$15,000 to her church, \$112,000 to her daughter, and \$42,000 to her husband. What is the amount of Joan’s taxable gifts for the current year (assuming that she does not elect to split the gifts with her spouse)?

More details;

What qualifies as a taxable gift?
As of 2017, the IRS allows a \$14,000 annual exclusion amount when it comes to taxable gifts. In other words, if a gift of money or property is value d at \$14,000 or less. It does not need to be report ed to the IRS and no gift tax will need to be paid.

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