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Merlo
Merlo, Accountant
Category: Tax
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Experience:  25+ years tax consulting. Specializing in returns for US citizens living abroad
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computation of the estate tax for school

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I am studying for school and I am having a problem with computation of the estate tax and reading 2001(c). If there is a tentative tax base of $6,750,000 how would I use the table in 2001(c) and how would I calculate the tax on the tentative tax base lets say for 2007 and 2009 ? Any helpw would be greatly appreciated

Hello tuffcookie.

 

You cannot simply use the rates in the table shown in 2001(c) except for the year 2002. In years between 2003 and 2009 the maximum tax rate is lowered. For years 2007, 2008 and 2009 the maximum tax rate is 45%. Refer to paragraph (c)(2) in IRC Section 2001.

 

http://www.fourmilab.ch/ustax/www/t26-B-11-A-I-2001.html

 

So you would not used the maximum tax rate of 50% as shown in that chart.

 

If the taxable estate after applying the allowed exemptions was $6,750,000, the estate tax due would be $2,918,300 for both years.

 

You would replace the last bracket in the chart as follows:

 

Over $1,500,000 $555,800, plus 45 percent of the excess of such amount over
$1,500,000.

 

So $5,250,00 @ 45% is $2,362,500 plus $555,800 = $2,918,300

 

If this was helpful please press the Accept button.

 

Thank you tuffcookie

 

 

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Customer: replied 6 years ago.
The light just went on ... thank you so much !