Assume that Bob Smith dies on May 25, 2011. Mr. Smith's assets include the following: ABC Stock costing $30,000 but valued at $40,000; a house costing $280,000 but valued at $620,000; life insurance in the amount of $600,000; and cash from various sources totaling $50,700. Three credit cards in Mr. Smith's name had balances totaling $8,530 on the date of death. The estate paid funeral and final medical expenses in the amount of $50,492. There were no charitable gifts designated by the will, and Mr. Smith was single at the time of his death. What is the amount of the taxable estate?

Question

Quizplus · Accepted Answer

The taxable estate is calculated by adding the value of all assets and subtracting liabilities and expenses. The total value of assets is $40,000 (stock) + $620,000 (house) + $600,000 (life insurance) + $50,700 (cash) = $1,310,700. Subtract the credit card debt of $8,530 and funeral/medical expenses of $50,492 to get $1,310,700 - $8,530 - $50,492 = $1,251,678.

Assume That Bob Smith Dies on May 25, 2011