Eric dies in the current year and has a gross estate valued at $16,500,000.The estate incurs funeral and administrative expenses of $100,000 and also pays off Eric's debts which amount to $250,000.Eric bequeaths $600,000 to his wife.Eric made no taxable transfers during his life.Eric's taxable estate will be
A)$4,250,000.
B)$15,550,000.
C)$4,150,000.
D)$16,500,000.

Question

Quizplus · Accepted Answer

Eric's taxable estate is calculated as follows:
Gross Estate: $16,500,000
- Funeral and administrative expenses: ($100,000)
- Debts: ($250,000)
= Adjusted Gross Estate: $16,150,000
- Marital deduction: ($600,000)
= Taxable estate: $15,550,000
Since Eric made no taxable transfers during his life, his taxable estate is subject to federal estate tax. The current federal estate tax rate is 40%, so Eric's estate would owe $6,220,000 ($15,550,000 x 0.4) in estate tax.

Eric Dies in the Current Year and Has a Gross