Coming to an expert is exactly what Dona and Wendy needed to do. The IRS
website describes the estate tax as the “right to transfer property at your death” (IRS,
2022). The estate includes everything from the date of Ernie’s death which was August
2017 (IRS, 2022). The fair market value is used and this makes up the gross estate valued
at 20 million (IRS, 2022). For 2017 the filing threshold is $ 5,490,000 and since the
amount exceeds this, then there would need to be a filing (IRS, 2022). Dona and Wendy
want to know what the taxes would be if one or the other got 100 percent of the estate. If
Dona was able to get all 100 percent, then the 20 million would be subject to the 2017
estate limitation (IRS, 2022). This means that the exemptions would take into effect
leaving $14,510,000 that will be taxed (IRS, 2022). Of the estate there would be $345800
plus another 40% on the other $13,510,000 (Beausejour, 2017). Unlike Wendy who
would be able to use the marital deduction and would have no tax liabilities (Beausejour,
2017).
If the two were able to reach a settlement outside of court or if the court were to
split the estate between them, they would be subject to the portion which they received.
Meaning that Wendy will still have 0 whereas Dona will have liability for anything over
the unified credit threshold (Beausejour, 2017).
In the AICPA Code of Professional Conduct you must remain free of conflicts
when discharging professional responsibilities (AICPA, 2014). If the ladies asked for me to
represent both of them in their court cases, then this would be a conflict of interest "Integrity
and Objectivity Rule" [1.100.001]. “The member or the member’s firm provides a professional
service related to a particular matter involving two or more clients whose interests with
respect to that matter are in conflict” consituts as a conflict of adverse interest (AICPA, 2014).
Independence would not be able to be maintained by representing them both (AICPA, 2014).
But if they were merely coming in to have the calculations done to give them what if scenarios
and I was not going to be involved in the cases then I could help them both. Where the issue
comes up is if I cannot maintain independence in the research. Since I am not auditing them,
and I am just showing them the calculations then this should not be a problem maintaining
independence.
In 2018, the threshold changed from $5,490,000 to $11,180,000 (IRS, 2022). With
the lowering of the value to $10 million this would not affect Wendy since she is still
considered the spouse and can take the marriage exemption. Whereas now Dona will fall
under the $11,180,000 threshold so the entire amount will not subject to the estate tax
(IRS, 2022).
Hope you have a great week everyone and good luck!
Sean Dudek
Works Cited
AICPA. (2014, December 15). AICPA Code of Professional Conduct. American Institute
of Certified Public Accountants, Inc. Retrieved April 27, 2023, from
https://us.aicpa.org/content/dam/aicpa/research/standards/codeofconduct/download
abledocuments/2014december15contentasof2016august31codeofconduct.pdf
Beausejour, B. D. J., JD. (2017, October 1). Exploring the estate tax: Part 1. Journal of
Accountancy; Association of International Certified Professional Accountants.
Retrieved April 27, 2023, from
https://www.journalofaccountancy.com/issues/2017/oct/estate-tax-basics-part-
1.html
IRS. (2022, October 22). Estate Tax. Internal Revenue Service. Retrieved April 27, 2023,
from https://www.irs.gov/businesses/small-businesses-self-employed/estate-tax
