Jose dies in the current year and has a gross estate valued at $13,000,000 in 2019.Over the past ten years,Jose had made taxable gifts of $400,000.The estate incurs funeral and administrative expenses of $100,000 and also pays off Jose's debts which amount to $300,000.Jose bequeaths $500,000 to his wife.What is the amount of Jose's tax base,the amount on which the estate tax is computed?
A)$12,100,000
B)$12,500,000
C)$700,000
D)$1,100,000

Question

Quizplus · Accepted Answer

The tax base is the sum of the gross estate plus adjusted taxable gifts minus allowable deductions.
Gross estate = $13,000,000
Adjusted taxable gifts = $400,000 - $11,580 (2019 annual exclusion) = $388,420
Allowable deductions = funeral and administrative expenses ($100,000), debts ($300,000), and marital deduction ($500,000)
Tax base = $13,000,000 + $388,420 - ($100,000 + $300,000 + $500,000) = $12,488,420
Therefore, the tax base is $12,488,420 which is closest to answer choice B ($12,500,000).

Jose Dies in the Current Year and Has a Gross