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Estate Tax. 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 administration
expenses of $125,000. Clay had debts amounting to $150,000 and
bequeathed all of his estate to his children. During his life, Clay made
no taxable gifts.
• a.What is the amount of Clay’s taxable estate?
• b.What is the tax base for computing Clay’s estate tax?
•
c.What is the amount of estate tax owed if the tentative estate
tax (before credits) is $3,235,800?
•
d.Alternatively, if, six months after his death, the gross assets
in Clay’s estate declined in value to $7,500,000, can the administrator
of Clay’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?
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ACC 456 Week 2 Key Points (Simple Income Tax)
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