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Harold and Maude are married and live in a common-law state. Neither has made any taxable gifts and Maude owns (holds title to) all their property. She dies with a taxable estate of $25 million and leaves it all to Harold. He dies several years later, leaving the entire $25 million to their three children. (Refer to Exhibit 25-1 and Exhibit 25-2.)

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Answer:

estate tax  due of Harold and Maude = $5,440,000

Explanation:

Taxable estate and cumulative transfers = $ 25,000,000

Tax on cumulative transfers = $9,945,800

   =24000000*40%+345800

Unified credit - 2019 = $4,505,800

Estate Tax Due = $5,440,000

Gross Estate = $ 25,000,000

Exclusion = $ 11,400,000

Taxable Amount = $ 13,600,000

Effective Tax Rate = 40%

Estate Tax Due = $5,440,000

The estate tax due of Harold and Maude when the taxable estate should be $5,440,000.

Calculation of the estate due:

Since

Taxable estate and cumulative transfers = $ 25,000,000

Now

Tax on cumulative transfers = $9,945,800 (24000000*40%+345800)

Less: Unified credit - 2019 = $4,505,800

So, Estate Tax Due = $5,440,000

Now

Gross Estate = $ 25,000,000

Exclusion = $ 11,400,000

Taxable Amount = $ 13,600,000

And, Effective Tax Rate = 40%

So,

= 40% of taxable amount

= 40% of $ 13,600,000

Estate Tax Due = $5,440,000

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