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Example 4
This is a simple extension of the third sample computation. In this computation, one additional factor will be added. Let's assume that the last computation was a proposed deficiency by the IRS, and the Estate went to Appeals or Court to get the proposed tax lowered. The Attorney representing the Estate agreed to take the case forward for one-third of any tax (State or Federal) which he saves the Estate. the final tax will be based upon the following additional facts:
Step 1Open the program by double clicking on the icon if it is not already open. Step 2Click on the File menu and select the Open option. In the Open dialog box select the file you saved above, "Sample3". When it is loaded, go to the File menu and select Save As to save the file under a new name. Save it under the name "Sample4". Notice that the name on the title bar has changed to "Sample4" showing that the new name was accepted. Step 3We must change the gross estate. Click on the General button on the Case Bar to the left of the DeskTop. this will bring up the General Tab Sheet with the General Tab Page selected. Tab down to the edit box for the gross estate and change it from 900,000 to 875,000. Hit Enter to return to the main output window. Step 4Next we must indicate the information about the attorney's fees. Click on the Deduct button on the Case Bar to the left of the DeskTop. this will bring up the Deductions Tab Sheet with the Marital Tab Page selected. Click on the Fee Tab to go to the Fee Tab Page. Click on the box to indicate that this option has been selected. Select the option, percentage of claim. Enter the percent of claim as 33.333333333. Enter the total amount on which the claim is based as $146,922.12. Then in the list box with the series of usable expenses listed you should double click on federal estate tax. An 'X' will appear to the left of the entry showing that it has been selected. Then double click on the state tax. An 'X' will also appear to the left of this entry. Step 5We must now change the entry for the residue computation. Click on the Residue Tab to go to the Residue Tab Page. Select the Complex button. This places you in the complex input dialog box. Then in the list box with the series of usable expenses listed you should double click on commissions & fees. When the complex item entry screen for commissions & fees appears enter the percent of expense to be charged to residue as 100%. The hit Enter to return to the complex input dialog box. Click on OK to return to the Residue Tab Sheet. Click on OK again to return to the main output window. In the output window the federal estate tax is $114,962.78, the deduction for attorney's fees is $3,438.48 and the charitable deduction is $60,646.96. Step 6We have finished this computation. The next thing to to is to save this file. Click the Save Button on the Tool Bar or from the File menu select Save. Check your answer against the program output shown below.
Program OutputEstate of: Joe Blow, Sr., DD: 6 15 1985
Memorandum: A fourth sample computation (attorney's fee)
File Name: D:\TEST\EST3\Sample4.ET3, (Standard Output)
Inter-Est Version 3.00, Release 00
Date and time of run: Friday, December 22, 1995, 02:22 PM
COMPLEX FOR RESIDUE COMPUTATION SECTION
Numerator will be fixed dollar amount
Denominator is taxable estate
Numerator Numerator
Fixed Indeterminate 'All But'
Percent Fraction Fraction
Federal, Estate Tax 0.0000000 % 0.00 250,000.00
Federal, Additional Tax 0.0000000 % 0.00 0.00
Federal, GST Tax, Part 3 0.0000000 % 0.00 0.00
Texas, Tax 0.0000000 % 0.00 250,000.00
Texas, 2207A Reimb. 0.0000000 % 0.00 0.00
Federal, 2207A Reimb. 0.0000000 % 0.00 0.00
Interrelated Fees & Comm. 100.0000000 % 0.00 0.00
Expense Allocation Table
Total Allocated to
Expense this Section
Federal, Estate Tax 114,962.77 77,921.72
Federal, Additional Tax 0.00 0.00
Federal, GST Tax, Part 3 0.00 0.00
Texas, Tax 21,643.90 14,670.23
Texas, 2207A Reimb. 0.00 0.00
Federal, 2207A Reimb. 0.00 0.00
Interrelated Fees & Comm. 3,438.48 3,438.48
Total Expenses from Table Charged to this Item 96,030.43
RESIDUE SECTION
Gross Estate 875,000.00
Specific Beq. (ex. MD & CD) before Residue <250,000.00>
Pre-residuary to Marital 0.00
Pre-residuary to Charitable <12,500.00>
1041 Expenses Charged to Residue 0.00
Sch. JK&L not Charged to Residue 0.00
Sch. JK&L (before interrelated) <35,000.00>
Expense from Expense Allocation Table <96,030.43>
Net Residue 481,469.57
INTERRELLATED COMMISSIONS & FEES SECTION
Percent of Claim Selected (Fixed Amount less Percent of Selected Expenses)
Total Amount upon which the Claim is based 146,922.12
Federal, Estate Tax 114,962.78
Texas, Tax 21,643.90
Total Expenses Used 136,606.67
Difference (Savings) 10,315.45
Percentage Used 33.3333333 %
Interrelated Fees & Commissions 3,438.48
CHARITABLE DEDUCTION SECTION Specific Bequests to Charity 12,500.00 Percent of Residue to Charity 10.0000000 % Charitable Bequests from Residue 48,146.96 Charitable Deduction 60,646.96
MAIN PRINTOUT SECTION
Gross Estate 875,000.00
Sch. JK&L (before interrelated) 35,000.00
Interrelated Fees & Commissions 3,438.48
Debts & Expenses 38,438.48
Marital Deduction 0.00
Charitable Deduction 60,646.96
Total Deductions 99,085.44
Taxable Estate 775,914.56
Adjusted Taxable Gifts 0.00
Total Amount Drawing Tax 775,914.56
Tentative Tax 258,406.68
Aggregate Gift Tax Paid 0.00
Tax before Unified Credit 258,406.68
Unified Credit from Table 121,800.00
Adjustment to Unified Credit 0.00
Net Unified Credit 121,800.00
Tax before SDTC 136,606.68
State Death Tax Credit 21,643.90
Net Tax after State Death Tax Credit 114,962.78
Gift Tax Credit 0.00
Foreign Death Tax Credit (Statutory) 0.00
Prior Transfer Credit 0.00
Foreign Death Tax Credit (Treaty) 0.00
Total Credits 0.00
Estate Tax 114,962.78
Generation Skipping Transfer Tax 0.00
Increased Estate Tax 0.00
Total Federal Tax 114,962.78
STATE TAX COMPUTATION SECTION - Texas
State Tax Computation based upon SDTC, All
Computed State Tax 21,643.90
LAST LINE OF PRINTOUT Previous Example Home Page Top of Page Next Example
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