Reference no: EM132800648

Problem - Estate Taxes on Saul Schwab's Estate - Saul Schwab, of Knoxville, Tennessee, was 65 when he retired in 2010. Camille, his wife of 40 years, passed away the next year. Her will left everything to Saul. Although Camille's estate was valued at $2,250,000, there was no estate tax due because of the 100 percent marital deduction. Their only child, Eli, is married to Kathleen. They have four children, two in college and two in high school. In 2011, Saul made a gift of Apple stock worth $260,000 jointly to Eli and Kathleen. Because of the two $14,000 annual exclusions and the unified credit, no gift taxes were due. When Saul died in 2015, his home was valued at $850,000, his vacation cabin was valued at $485,000, his investments in stocks and bonds were valued at $1,890,000, and his pension funds were worth $645,000 (Eli was named beneficiary). Saul also owned a life insurance policy that paid proceeds of $700,000 to Eli. He left $60,000 to his church and $25,000 to his high school to start a scholarship fund in his wife's name. The rest of the estate was left to Eli. Funeral costs were $15,000. Debts were $90,000 and miscellaneous expenses were $25,000. Attorney and accounting fees came to $36,000. Use Worksheet 15.2 to guide your estate tax calculations as you complete these exercises.

Calculate the estate tax base; taking into account the gifts given to Eli and Kathleen (remember that the annual exclusions "adjust" the taxable gifts).