Question

15.Assume that Bob Smith dies on May 25, 2018. 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 value of the estate for estate tax purposes (2 points)

Answer 1

Answer:

$1,150,278

Since the value of the estate is lower than the minimum taxable estate ($11.58 million), no estate tax should be paid.

Explanation:

Total assets:

• ABC Stock $40,000
• a house $620,000
• life insurance $600,000
• cash $50,700
• total assets = $1,209,300

Total deductible liabilities:

• three credit cards $8,530
• Funeral and medical services $50,492
• total deductible liabilities = $59,022

Total value of the estate for estate tax purposes = total assets - total deductible liabilities = $1,209,300 - $59,022 = $1,150,278

Since the value of the estate is lower than the minimum taxable estate, n o estate tax should be paid.