In 2002, Gert made a $5,000,000 taxable gift. The 2002 gift tax on $5,000,000 was $2,275.800. Gert was entitled to a unified credit of $345,800, resulting in a gift tax of $1,193,000. The marginal tax rate in 2002 is 50%. For the year of Gert's death (2020), the marginal rate for $5,000,000 of transfers is 40%. the tax on $5,000,000 would equal $1,945,800 before subtracting any credit. In arriving at Gert's estate tax liability, what is the amount subtracted for 2002 gift taxes paid?

Question

Quizplus · Accepted Answer

The Answer is $1,600,000 = $1,945,800 ($5,000,000 taxable transfer at current year rates)- $345,800 (where $1 million is the exemption equivalent for 2002).

In 2002, Gert Made a $5,000,000 Taxable Gift