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Comprehensive Problem 25-67 (LO 25-1, LO 25-2, LO 25-3, LO 25-4) Jack is single and he made his first taxable gift of $1,000,000 in 2008. Jack made additional gifts in 2009, at which time $1,778,000 to each of his three children and an additional $1,000,000 to State University (a charity). The annual exclusio $13,000. Recently Jack has been in poor health and would like you to estimate his estate tax should he die this year. Ja his taxable estate (after deductions) will be worth $10.54 million at his death. (Refer to Exhibit 25-1 and Exhibit 25-2.) (En answer in dollars and not in millions of dollars.) Estate tax EXHIBIT 25-2 The Exemption Equivalent Year of Transfer Gift Tax Estate Tax 1986 $ 500,000 $ 500,000 19871997 600,000 600,000 1998 625.000 625,000 1999 650,000 650,000 2000-2001 675,000 675,000 20022003 1,000,000 1,000,000 20042005 1,000,000 1,500,000 2006-2008 1,000,000 2.000.000 2009-2010* 1,000,000 3,500,000 2011 5,000,000 5,000,000 2012 5,120,000 5,120,000 2013 5.250,000 5.250,000 2014 5,340,000 5,340,000 2015 5.430,000 5,430,000 2016 5.450,000 5,450,000 2017 5,490,000 5,490,000 2018 11,180,000 11,180,000 *The applicable credit and exemption is zero for taxpayers who opt out of the estate tax in 2010. EXHIBIT 25-1 Unified Transfer Tax Rates* Tax Base Equal to or Over Not Over Tentative Tax Plus of Amount Over $ 18% 20 22. 6 0 10,000 20,000 40,000 60,000 80,000 100,000 150,000 250,000 500,000 750,000 1,000,000 10,000 20,000 40,000 60,000 80,000 100,000 150,000 250,000 500,000 750,000 1,000,000 0 1,800 3,800 8,200 13,000 18,200 23,800 38.800 70,800 155,800 248,300 345,800 0 10,000 20,000 40,000 60,000 80,000 100,000 150,000 250,000 500,000 750,000 1,000,000 2A 37 39 0 *The applicable credit and exemption is zero for estates that opted out of the estate tax in 2010. EXHIBIT 25-2 The Exemption Equivalent Year of Transfer Gift Tax Estate Tax 1986 $ 500,000 $ 500,000 19871997 600,000 600,000 1998 625.000 625,000 1999 650,000 650,000 2000-2001 675,000 675,000 20022003 1,000,000 1,000,000 20042005 1,000,000 1,500,000 2006-2008 1,000,000 2.000.000 2009-2010* 1,000,000 3,500,000 2011 5,000,000 5,000,000 2012 5,120,000 5,120,000 2013 5.250,000 5.250,000 2014 5,340,000 5,340,000 2015 5.430,000 5,430,000 2016 5.450,000 5,450,000 2017 5,490,000 5,490,000 2018 11,180,000 11,180,000 *The applicable credit and exemption is zero for taxpayers who opt out of the estate tax in 2010

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