Charles Wallace died in 2012, leaving an estate of $27,000,000. Charless wife died in 2009. In 2009, Charles gave his son property that resulted in a taxable gift of $6,000,000 and upon which Charles paid $1,300,000 in transfer taxes. Charles had made no other taxable gifts during his life. Charless will provided a charitable bequest of $900,000 to his church.

Exhibits - Tax schedules and credits Exhibit 15.7 Federal Unified Transfer Tax Rates: Exhibit 15.8 Unified Credits and Applicable Exclusion Amounts for Estates and Gifts: Taxable Estate Value Tentative Tax More Than But Not More Than Base Amount + Percent On Excess Over $0 10,000 $0 10,000 20,000 1,800 20% $10,000 20,000 40,000 3,800 22% 20,000 40,000 60,000 8,200 24% 40,000 60,000 80,000 13,000 26% 60,000 80,000 100,000 18,200 28% 80,000 100,000 150,000 23,800 30% 100,000 150,000 250,000 38,800 32% 150,000 250,000 500,000 70,800 34% 250,000 500,000 155,800 37% 500,000 Exhibits Tax schedules and credits Exhibit 15.7 Federal Unified Transfer Tax Rates: Exhibit 15.8 Unified Credits and Applicable Exclusion Amounts for Estates and Gifts: Unified TaxCredit- Applicable ExclusionAmount- Unified Tax Credit- Applicable ExclusionAmount - Gifts Year Estates Estates Gifts 2006 $ 780,800 $2,000,000 $345,800 $1,000,000 2007 $780,800 $2,000,000 $345,800 $1,000,000 2008 $780,800 $2,000,000 $345,800 $1,000,000 2009 $1,455,800 $3,500,000 $345,800 $1,000,000 2010 Estate tax repealed for $330,800 $1,000,000 2010 2011 $1,730,800 $5,000,000 $1,730,800 $5,000,000 2012 $1,772,800 $5,120,000 $1,772,800 $5,120,000 2013 $2,045,800 $5,250,000 $2,045,800 $5,250,000 Use the following worksheet and Exhibits 15.7 and 15.8 to determine the federal transfer tax on Charles Wallace's estate. (Hint: Enter a value of $0 for any line that does not apply.) Computing Federal Estate Tax Due Name: Charles Date: 11/30/2011 Line Computation Item Amount Total Amount 1 Gross estate $27,000,000 2 Subtract sum of: (a) Funeral expenses $0 (b) Administrative expenses $0 (c) Debts $0 (d) Other expenses $ Total: $ 3 Result: Adjusted gross estate 4 Subtract sum of: (a) Marital deduction $ (b) Charitable deduction $ Total: ( $ 5 Result: Taxable estate $ 6 Add: Adjusted taxable gifts (post-1976) $ 7 Result: Estate tax base $ 8 Compute: Tentative tax on estate tax base 9 Subtract sum of: (a) Gift tax payable on post-1976 gifts $ (b) Unified tax creditb $ Total: ($ 10 Result: Total estate taxes $ 11 Subtract: Other credits ($ 12 Result: Federal estate tax due $ Exhibits - Tax schedules and credits Exhibit 15.7 Federal Unified Transfer Tax Rates: Exhibit 15.8 Unified Credits and Applicable Exclusion Amounts for Estates and Gifts: Taxable Estate Value Tentative Tax More Than But Not More Than Base Amount + Percent On Excess Over $0 10,000 $0 10,000 20,000 1,800 20% $10,000 20,000 40,000 3,800 22% 20,000 40,000 60,000 8,200 24% 40,000 60,000 80,000 13,000 26% 60,000 80,000 100,000 18,200 28% 80,000 100,000 150,000 23,800 30% 100,000 150,000 250,000 38,800 32% 150,000 250,000 500,000 70,800 34% 250,000 500,000 155,800 37% 500,000 Exhibits Tax schedules and credits Exhibit 15.7 Federal Unified Transfer Tax Rates: Exhibit 15.8 Unified Credits and Applicable Exclusion Amounts for Estates and Gifts: Unified TaxCredit- Applicable ExclusionAmount- Unified Tax Credit- Applicable ExclusionAmount - Gifts Year Estates Estates Gifts 2006 $ 780,800 $2,000,000 $345,800 $1,000,000 2007 $780,800 $2,000,000 $345,800 $1,000,000 2008 $780,800 $2,000,000 $345,800 $1,000,000 2009 $1,455,800 $3,500,000 $345,800 $1,000,000 2010 Estate tax repealed for $330,800 $1,000,000 2010 2011 $1,730,800 $5,000,000 $1,730,800 $5,000,000 2012 $1,772,800 $5,120,000 $1,772,800 $5,120,000 2013 $2,045,800 $5,250,000 $2,045,800 $5,250,000 Use the following worksheet and Exhibits 15.7 and 15.8 to determine the federal transfer tax on Charles Wallace's estate. (Hint: Enter a value of $0 for any line that does not apply.) Computing Federal Estate Tax Due Name: Charles Date: 11/30/2011 Line Computation Item Amount Total Amount 1 Gross estate $27,000,000 2 Subtract sum of: (a) Funeral expenses $0 (b) Administrative expenses $0 (c) Debts $0 (d) Other expenses $ Total: $ 3 Result: Adjusted gross estate 4 Subtract sum of: (a) Marital deduction $ (b) Charitable deduction $ Total: ( $ 5 Result: Taxable estate $ 6 Add: Adjusted taxable gifts (post-1976) $ 7 Result: Estate tax base $ 8 Compute: Tentative tax on estate tax base 9 Subtract sum of: (a) Gift tax payable on post-1976 gifts $ (b) Unified tax creditb $ Total: ($ 10 Result: Total estate taxes $ 11 Subtract: Other credits ($ 12 Result: Federal estate tax due $