Gabriel had a taxable estate of $18.5 million when he died in 2023. Calculate the amount of estate tax due (if any) if Gabriel made prior taxable gifts in 2005 totaling $1 million
18,500,000
1,000,000
at which time he claimed an applicable credit of $1 million and paid no tax. Gabriel was unmarried at his death. (Use Exhibit 25-1.)
1,000,000
Essay
Explanation
Adjusted taxable gifts
$1,000,000
Taxable estate
18,500,000
Cumulative taxable transfers
$19,500,000
Tax on cumulative transfers
$7,745,800
Applicable credit (2023)
(5,113,800)
Estimated estate tax due
$2,632,000
$2,632,000 in 2023
In 2023, Don and his son purchased real estate for an investment. The price of the property was $528,000, and the title named Don and his son as joint tenants with the right of survivorship.
528,000
Don provided $324,000 of the purchase price and his son provided the remaining $204,000. Has Don made a taxable gift and, if so, in what amount?
324,000
204,000
Don has made a taxable gift of $43,000.
43,000
$
[$324,000
−
($528,000) ÷ 2]
−
$17,000 in 2023.
For the holidays in 2023, Samuel gave a necklace worth $36,400 to Jennifer and jewelry worth $45,400 to Savannah. Samuel is married to Wendy, and they live in a community-property state. Has Samuel made any taxable gifts and, if so, in what amounts?
36,400
45,400
$1,200 and $5,700.
18,200
22,700
1,200
5,700
$1,200 and $5,700
Since the gifts are from community property, then both Samuel and his spouse made a gift of $18,200 to Jennifer and $22,700 to Savannah. After
applying the 2023 annual exclusion, both Samuel and his spouse have made taxable gifts of $1,200 ($18,200
−
$16,000) to Jennifer and $5,700
($22,700
−
$16,000) to Savannah.
At his death Stanley owned real estate worth $333,540 with two other individuals as equal tenants in common. Stanley contributed
345,000
3
$51,000 to the $102,000 total cost of the property. What amount, if any, is included in Stanley's gross estate?
50,000
100,000
$115,000
Spartan Corporation, a U.S. company, manufactures green eyeshades for sale in the United States and Europe. All
manufacturing activities take place in Michigan. During the current year, Spartan sold 8,000 green eyeshades to European
8,000.00
customers at a price of $10.20 each. Each eyeshade costs $4.10 to produce.
10.20
4.10
For each independent scenario, determine the source of the gross income from sale of the green eyeshades.
All of Spartan's production assets are located in the United States.
Apportioned to production activity - U.S. source
48,800
$
Gross profit from the sales is $48,800 (8,000 units × {$10.20
−
$4.10}). 100 percent of gross profit is sourced to the U.S. based on the location where the production assets are located.
b.
Half of Spartan's production assets are located outside the United States.
Apportioned to production activity - Foreign source
24,400
$
Apportioned to production activity - U.S. source
24,400
$
Sombrero Corporation, a U.S. corporation, operates through a branch in Espania. Management projects that the
company’s pretax income in the next taxable year will be $118,500: $94,400 from U.S. operations and $24,100 from the
118,500
94,400
24,100
Espania branch. Espania taxes corporate income at a rate of 30 percent.
30%
a. If management's projections are accurate, what will be Sombrero's excess foreign tax credit in the next taxable year? Assume all of
the income is foreign branch income.
Taxable income
$118,500
× 21%
21%
