1 / 16100%
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 members 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).
Ernie has a wife named Wendy and a daughter from a previous relationship named Donna. Ernie has
passed away Wendy and Donna are at odds with one another regarding the assets of Ernie. Upon
Ernie’s passing, he has assets totalling $20 million of which the majority is working interest in oil
wells. Ernie and Wendy reside in a state where upon the death of a spouse the surviving partner
receives 50% of the estate no matter if there is a will. Donna has a handwritten will on a napkin she
obtained from Ernie which states he leaves all his worldly goods to her.
Estate Tax 2018
If Wendy received the estate, then in accordance with 26 U.S. Code S 2056 Wendy, then there would
be $0 estate tax due because marital deduction is unlimited for this scenario. On the other hand, if the
estate was solely given to Donna’s estate tax amount would be $3,528,000. We derive that amount by
taking gross estate of $20 mill less the 2018 exclusion amount of $11,180,000. Also, this scenario does
not have deductions such as expense indebtedness and taxes as outlined in Sec 2053, or losses outlined
in Sec 2054, therefore no further deduction is required. After all, deductions have been deducted from
a gross estate, we then would multiply the amount by 40%.
Consequences
If the settlement was reached between the two due to the marital deduction Wendy still would not pay
any estate taxes. Donna would still have to pay based on the amount received using the above
calculations if it was split 50/50.
Conflict
There is a conflict about representing them as clients. The conflict of interest is due to them being at
odds over how the estate should be decided. A professional would not want to give the perception that
she is biased to the other side or the public.
Alternative Valuation The estate can choose to elect the alternative valuation versus the date of death
by selecting the irrevocable option on the estate return (Anderson, 2023). The option for alternative
valuation is obsolete if the return Is filed more than a year after the due date (Anderson, 2023). Wendy
as Ernie’s spouse will receive the marital deduction, therefore $0 tax due. Donna Ernie’s daughter
would also pay $0 as well, due to the 2018 exclusion amount of $11,180,000.
All US citizens or residents are taxed on the transfer of an estate imposed by IRC §2001(a) of which
the base is equated to the amount of the taxable estate and adjusted taxable gifts less various
deductions in excess of the basic exclusion amount at the time of the death. IRC §2053(a)(1-4) allows
for funeral, administration, claims against the estate, and unpaid mortgage expenses and IRC §2055
allows for the deduction of transfers made for public, charitable, and religious uses. Furthermore, IRC
§2056 provides a deduction to the gross estate equal to the value of interest that is transferred to a
surviving spouse.
If Wendy were to receive 100% of Ernie’s estate, she would be subject to no tax liabilities under the
marital deduction. If Donna were to receive 100% of the estate, she would be subject to significant tax
liabilities. The 2017 unified credit threshold was $5,490,000, so Donna’s base is $14,510,000 as no
other deductions are indicated (IRS, 2022). She would be responsible for $345,800 plus 40% on the
excess above $1,000,000 ($13,510,000) which is $5,749,800 (Caplinger, 2017).
If a settlement was reached between the two opposing parties, first the taxable estate would be reduced
by applying deductions. Wendy would still owe $0 for any portion awarded due to the marital
deduction. Donna would be responsible for liabilities of $345,800 plus 40% on the excess above
$1,000,000.
The AICPA Code of Professional Conduct applies to all members, including public, business, and all
other practices under Rule 0.100.010. Under both sections for public and business (1.100.001.01 and
2.100.001.01, respectively), members must maintain objectivity and integrity, and be free of conflicts
of interest (AICPA, 2014). The Code provides that providing tax or personal financial planning
services for several members of a family whom the member knows have opposing interests is a
situation where a conflict of interest may arise under 1.110.010.010 (AICPA, 2014). The matter of
Ernie’s estate is considered a conflict of interest, however, the significance of the threat caused by the
conflict can be evaluated and if it is not at an acceptable level the member may provide safeguards to
mitigate potential issues and ultimately provide disclosures and consent from both parties to proceed
(AICPA, 2014).
IRC §2032 allows for and alternative valuation when determining the gross estate. If elected, the
evaluation of property can be determined up to 6 months post death. The threshold increased to
$11,180,000 in 2018 (IRS, 2022). Wendy would remain unaffected regardless of the year, however,
Donna would benefit from both the decreased valuation of the estate and the increased unified credit.
If Donna were to receive 100% of the estate at the $10,000,000 valuation, her tax liability would be $0.
First, I want to start by saying I spent way too much time thinking about why Donna and Wendy do
not like each other. It may seem wasteful (I know), but I am so used to meeting new clients and having
them spill their entire life’s history to explain what they want done and why they want it done in that
way. It is a little jarring to have so little information provided but that is just me. Unfortunately,
because they do not get along and Ernie has already passed on by the start of this question, there is no
way to know his true wishes. So, we must work with what we have.
So, what do we have, what are the facts? We have 1 hard piece of evidence, the established estate
statement which benefits Wendy’s claims as a spouse and Donnas handwritten napkin. A piece of
circumstantial evidence that cannot withstand the calls for omittance from evidence in the court of law
without any additional supporting evidence, which Donna does not have. Federal Rules of Evidence
rule 801(c)(2) states that Hearsay means a statement that a party offers as evidence to prove the truth
of the matter asserted in the statement. This statement being her late father’s updated late minute will
and his final words to her leaving her his entire estate. And rule 401(a) states that all relevant evidence
must make a fact more probable than it would without it. So, with no witness statement, notary seal, or
statement from a forensic handwriting specialistic who can say with certainty that the writings on the
napkin match those of the late Ernie, the napkin is inadmissible.
Based on the laws in Wendy favor, she would be entitled to no less than 50% of the entire estate (IRS
code 2010 (c)(4). Donna’s claims would be more difficult to secure. Using the hypotheticals in the
assignment, if Wendy gets all $20M, $10M set aside as inheritance liability and $10M gifted would
leave Wendy with an estate tax of $0.00 after the exemptions and if his daughter Donna gets all $20M,
her taxable estate amount would be $8.82M in 2018 with a tax debt of $3.528M and an after-tax value
of $16.472M.
It would be great to believe that Wendy & Donna could reach a compatible settlement agreement in
probate court. Having finally put aside their torrid history of once being best friends in college until
Donna brought Wendy home during senior year winter holiday and Wendy met Ernie. By Spring break
Wendy dropped out of school and was picking out rings with Ernie in tow. And by June, they made it
back from their honeymoon just I time for Donna’s graduation. Maybe I have been watching too many
Kdrama’s, but I digress. As I said before I might have gotten a little too invested in the working
narrative for this discussion. Trying to take into consideration as to the Why’? Because a lot of the
troubles in this case could be totally avoided if they got along, things would be a lot simpler.
If Wendy and Donna could agree to sharing the full estate each taking a 50% stake, the taxable estate,
and the tax debt of the inheritance for Donna would be fully exempt. Because under the law as Ernie’s
surviving spouse Wendy’s entire $10M share would be tax free as a part of the estate’s gross assets and
liability, and Ernie’s entire $12.92 unified exemption would be used towards Donnas $10M share thus
making her inheritance tax free as well.
However, if believing Donna’s (and my) assumptions are correct and Wendy married Ernie for his
money. A more likely settlement outcome would be Wendy receiving a larger share than Donna, even
if there is a chance for monies to be lost to tax liability, all due to their poor relationship. Using that as
a base and if their probate settlement were to come to a 75/25% split. Wendys would receive her 50%
of the estate, $10M as a surviving spouse and the remaining $5M awarded her would be below the
exemption threshold therefore both Wendy’s $5 and Donna’s 25% or $5M would also be tax free as of
none of Ernie’s unified credits have been used.
Only in the speculative events where one triumphs over the other and chooses to proceed without
sharing any of the estate with the other, does an estate tax generate and result in a balance due to be
paid under regular inheritance tax law, and that more likely in the cases were Donna’s legal team
defeats Wendy’s. Because of Wendys rights as spouse a surviving.
One of those cases being Donna’s legal team successfully nullifying Ernie and Wendy’s marriage
license (again deep diving into my expanded narrative). Having only been just married in summer
2016, Ernie dying in the late Summer 2017 & being able to prove Wendy’s infidelities throughout
their entire time together, Donna’s Team’s work awarded her 100% of her late fathers estate.
Unfortunately, by the time probate ended in late February and early March the estate had lost almost
¼* of its value due to severe decreases in oil prices.
And knowing she would be faced with a large bill after her legal battle came to an end, Ernie’s
Executor (Donna’s God Father----but we will not get into that right now) chose to use the Alternative
Valuation Date to help combat the expected tax debt. (In my narrative) The Estate is now valued at
$15.65M, placing Donna’s inheritance well over the 2018 unified credit limit of $11.18M. That will
leave her with a $4.47M taxable estate, a $1.788M tax liability and an after-tax value of her
inheritance at $13.862M under the 2018 laws.
Using this same scenario under the 2023 UCL of $12.92M, Donna’s taxable estate would be $2.73M,
that times the unchanged 40% tax, leaves a tax debt of $1.092M and the after-tax value of $ 14.558M.
(And since I have just completed the tax season) When using the UCL of 2022, Donna’s would have
faced a much higher tax liability due to the limit being just $12.06M. The taxable estate would have
been $3.59M with a federal estate tax debt of $1.436M and a total after tax value of just $14.214M.
Following this week’s narrative but adjusting to my own totals if Wendy’s legal team won, and the
estate’s value decreased to $15.65M using the same AVD. The Executor using Wendy’s spousal claim
would be able to receive 50% of her awarded share through the gross estate under IRS section
2010(5)(a) with the remaining 50% or $7.825M being gifted to her would fall well below the UCL for
2018, 2022 and 2023 of $11.18M, $12.06M and $12.92M respectfully. All of which would result in a
$0.00 federal estate tax debt.
The ‘conflict’ question for last because as I contemplate my future as a Tax Attorney, I know conflict
of interest is a matter that I will inevitably have to face at some point in my career. However, trying to
objectively debate the grounds of for and against in this case without just repeating what I have read
already is difficult. I can honestly say if I got emotionally attached to either side, I will have to recuse
myself from the other side. It is different in tax and financial matters but when it comes to the law, I
can think of several reasons why joint representation would not benefit either Wendy or Donna.
(Personal narrative aside). Both have vastly different desired outcomes in this case. In my opinion,
even with written consent, if a clause is not added to prevent retaliatory suits on false claims of
negligence or damages for loss of claims the representation cannot take place. And I do not believe an
exception can be taken in this case for an individual or small law office. There would be a conflict of
interest if one were to try and duel represent this case.
To be able to fairly represent both Wendy and Donna and not compromise their representation, only a
large legal firm can accomplish such a feat. A firm large enough where each client’s legal team can
independently focus solely on their clients’ needs without worrying about the consequence of tactic.
So, the dual representation would be in the firm’s name alone. There would not be any crossover
between legal team members before the clients or the judge.
Ernie's estate is subject to federal estate tax, which is a tax on the transfer of the estate of a deceased
person. The estate tax is calculated based on the total value of the estate and the applicable exclusion
amount, which is the amount of the estate that is exempt from federal estate tax. Per the IRS, in 2023
the applicable exclusion amount for federal estate tax is $12.92 million per person (adjusted annually
for inflation). This means that an individual could pass up to $12.92 million to their heirs without any
federal estate tax liability. For married couples, the applicable exclusion amount is portable, meaning
that if one spouse does not use all of their applicable exclusion amount, the remaining amount can be
transferred to the surviving spouse. In this case, Ernie's estate is valued at $20 million at the time of
his death, which would exceed the applicable exclusion amount for a single individual. However,
Ernie's estate could take advantage of the marital deduction, which allows for unlimited transfers of
property between spouses without incurring estate tax. Under the marital deduction, Wendy would be
entitled to an elective 50% share of Ernie's estate, regardless of what Ernie's will says. Therefore, if
Wendy gets all of the money, there would be no federal estate tax liability. On the other hand, if Donna
gets all of the money and Ernie's estate is valued at $20 million, Donna will likely face a significant
estate tax liability. If Donna gets all of the money, the entire estate would be subject to estate tax, and
the tax liability would be $2.832 million ($20 million - $12.92 million exemption amount = $7.08
million x 40%). Per the IRS the maximum estate tax rate is 40%, that is why I used that number here.
If the two parties reach a settlement, the consequences will depend on the terms of the
settlement agreement. If the settlement agreement provides for Wendy to receive less than the elective
share, she would have the right to claim the elective share under the applicable state law. The elective
share allows the surviving spouse to receive a statutory portion of the deceased spouse's estate,
regardless of what the will says (IRS Rev. Proc. 2005-24)
Under Section 2010(c)(3) of the Internal Revenue Code, the value of the elective share is
included in the gross estate of the deceased spouse for federal estate tax purposes. This means that if
Wendy were to claim the elective share and receive a portion of Ernie's estate, the value of that portion
would be included in Ernie's gross estate for estate tax purposes. On the other hand, if Wendy were to
waive her right to claim the elective share and receive less than her statutory share, the value of her
portion would not be included in Ernie's gross estate for estate tax purposes.
If Donna were to receive all of Ernie's estate, including the elective share, the estate tax
consequences would depend on the value of Ernie's estate at the time of his death. Under the 2023 law,
the estate tax exemption amount is $12.92 million per person. Any portion of Ernie's estate that
exceeds this amount would be subject to federal estate tax at a rate of up to 40%. However, if the value
of Ernie's estate is less than $12.92 million, no federal estate tax would be due.
e e e e e e As a legal professional, it is important to avoid conflicts of interest when representing clients.
In this case, there is a potential for a conflict of interest since Wendy and Donna have different
interests in Ernie's estate. Wendy wants to receive the elective share of 50% of the estate, while Donna
wants to receive all of Ernie's assets as provided in his handwritten will. According to Rule 1.7 of the
American Bar Association (ABA) Model Rules of Professional Conduct, a lawyer shall not represent
a client if the representation involves a concurrent conflict of interest. However, an exception can be
made if the lawyer reasonably believes that they can represent each client competently and diligently,
the representation is not prohibited by law, and each client provides informed consent in writing.
Therefore, before representing both Wendy and Donna, the lawyer must inform them of the potential
for a conflict of interest and obtain their informed consent in writing. The lawyer should also take
steps to ensure that they can represent each client competently and diligently without compromising
their duty to either client.
The alternative valuation date allows the estate to value assets as of six months after the
decedent's death rather than the date of death. This option is available to the executor of the estate, and
if the election is made, all assets in the estate must be valued as of the alternative valuation date. The
alternative valuation date is not available if the estate is valued at less than the date of death value.
Here, the value of Ernie's estate as of his date of death was $20 million, but due to the drop in oil
prices, the value of his estate six months later was only $10 million. If the executor of Ernie's estate
made the election to use the alternative valuation date, the estate tax consequences for Wendy and
Donna would change significantly. Assuming the estate is subject to the federal estate tax, the estate
tax rate in 2023 for estates valued at over $10 million is 40% (IRC section 2001(c)). If the estate is
valued at $20 million, the federal estate tax due would be a few million. However, if the estate is
valued at $10 million as of the alternative valuation date, the federal estate tax due would be $0.
Wendy and Donna would like to know the tax implication is a) Wendy gets all the money and b) if
Donna gets all the money, under the 2018 law. Let us start by stating some relevant 2018 estate law
facts, on this year the basic exclusion amount to be applied against the estate tax was $11,180,000
(IRC Section 2010(c)(2)). The 2018 estate tax consisted of 12 brackets starting with an 18% tax on
taxable estates in the $0-$10,000 and the highest was a 40% tax on taxable estates over $1,000,000.
(IRC Section 2010(c)) Estate tax applies progressively.
If the $20 million goes to Wendy, there should not be any tax consequences as per IRC section (IRC
Section 2056(a)) she would be benefiting from the unlimited estate tax marital deduction. This allows
one marriage partner to transfer an unlimited amount of assets to his or her spouse without incurring a
tax.
If the $20 million goes to Donna, there should be real tax implications. As the daughter, she does not
benefit of any unlimited estate tax deduction. However, the unused unified credit of $11.18 million
would be applied against the estate and she would have to pay estate taxes on the remaining estate of
$8.82 million. The approximate estate tax liability would be $3,473,800.
I believe the consequences if the two parties reach a settlement would depend on the terms of such
settlement. For simplicity let us assume both parties agree to respect the surviving spouse elective
50% share of the estate and Donna keeps the other 50%. In this case, there would not be any estate tax
consequences for either Wendy or Donna. As explained before Wendy has unlimited estate tax marital
deduction, so there should not be any estate tax liability of her share. In the case of Donna, she would
be receiving $10 million (50% share of the estate), this figure happens to be under the $11.18 million
of unused unified credit that Ernie had, so she would not be affected by any estate tax liability.
This is an interesting question. I do not believe I would have a conflict of interest in representing both
Wendy and Donna as clients as I would not have any personal gain by favouring either or. Through a
professional and ethical lens, I do not think it would be a good decision to represent both parties as to
focus my resources solely in the Favor of only one client.
This was a very challenging question for me, it generated more and more questions as I looked for an
answer. Questions regarding how time affects the limited supply of oil, thus altering the value of the
oil wells, also what does “working interest” mean in this scenario? What percentage of the estate was
“working interest”? etc I have no answers to those questions, so I am basing this argument on IRC
Section 2032 Alternate valuation, more specifically on section 2032 (a)(2):
“In the case of property not distributed, sold, exchanged, or otherwise disposed of, within 6 months
after the decedents death such property shall be valued as of the date 6 months after the decedent’s
death.”
Based on this section the estate valuation after the 6 months (on 02/2018) can be elected by the
executor, if the election decreases the value of the gross estate and estate tax, (IRC section 2032(c))
which are requirements met in this case.
The alternate valuation under section 2032 should decrease any possible tax liability for Wendy and
Donna, as we have seen before Wendy has no estate tax liability. But Donna would see a huge benefit
(from a tax perspective) as the new valuation is under the unified life time credit thus there is no
taxable estate.
Since Wendy is the spouse, she does not get taxed on any of Ernie's estate. This is due to the unlimited
spouse deduction which is outlined in section 2056 of the IRC. If his daughter Donna was to inherit all
the money, she would be subject to the estate tax. Upon reading through the text and code, I had a
major understanding of this topic. However, I am a bit confused on the wording of the question and
maybe either Professor Mahathey or someone can help clarify. If we are using the 2018 tax law, does
that mean we use 2017's filing threshold for the unified credit or does that mean we use 2018? The
outcome of the tax will vary greatly depending on which year we are supposed to use since the Tax
Cuts and Jobs Act of 2017 has more than doubled the tax exemption from 5.49 million to 11.18
million. I guess to cover my bases I will calculate the taxes for both years.
2017's estate tax: $5,864,000
2018's estate tax: $3,528,000
The consequences if they both decide to settle will depend on the terms of their settlement. It does not
matter what conclusion they come up with for Wendy's case. Whatever amount they would agree
upon, she will not be taxed because the spousal deduction is unlimited. Since it was stated that both
Donna and Wendy are hostile towards each other, I do not think they would come to an agreement.
Yes, absolutely there is a conflict of interest in this case. Each woman feels they are entitled to the
money. If a law firm was to represent both, they would be fighting amongst themselves. The only way
that someone could represent both is if they threw the whole case out and agreed upon a settlement.
If the estate was valued at 10,000,000 again Wendy's inheritance would not be subject to estate tax
because she is the wife. Now this new valuation could change the taxes owed by Donna if she were to
inherit it. Again, I will post both 2017 and 2018 since I was unclear as to which amount to use:
2017's estate tax: $1,804,000
2018's estate tax: $0
If we use the 2018 exemption threshold, Donna would not be subject to any estate taxes. This is
because the entire amount of 10 million is below the 11.18 million thresholds.
I.R.C. § 2056
Spouses may merge their estate tax exemptions through transfer. According to the American College
of Trust and Estate Counsel (ACTEC), it refers to a procedure whereby a surviving spouse may take
control of and use the unclaimed estate tax credit of a dead spouse. Because of this, the surviving
spouse enjoys two exemptions from estate taxes: the spouse's own claim plus the leftover exemption
of the passed-away spouse. The exemption amount for estate and gift taxes is $5.6 million per person
in 2018, compared to $5.49 million in 2017. The Tax Cuts and Jobs Act (TCJA) doubled the
exemption level, up to $11.18 million in 2018, with inflation adjustments. Following the 2018 estate
tax rules, a Donna’s estate would be free from federal estate tax up to a maximum of $11.18 million,
with a 40% top estate tax rate. This indicates that no federal estate or gift tax is due when a person
leaves $11.18 million to their children.
If Wendy and Donna agree, Ernie's money would probably be having an equal share, maybe in a way
that deviates from the conditions of Ernie's agreement. Both parties must agree on the agreement's
conditions, and the probate court supervising the case would probably accept them as well. They must
stick by the settlement terms, which will specify how the estate is divided between them, after it has
been negotiated and authorized.
Since Wendy and Donna have conflicting interests in the probate court case, there is indeed a conflict
of interest when managing both as clients. In contrast to Donna, who wants to fight the estate's
distribution and take all the money following the handwritten will, Wendy is interested in establishing
her right to the elective 50% portion of the estate as the surviving spouse. As a lawyer, it is crucial to
prevent conflicts of interest and unbiasedly defend each client's interests. According to the ABA
groups, Rule 1.7: Conflict of interest: Current clients, if there is an immediate conflict of interest, the
attorney is not permitted to represent the client (American Bar Association).
According to the State estate tax 2018 law where the family lives, the surviving spouse will receive
half of the deceased spouse's assets. This indicates that Wendy will receive $5 million from Earnie’s
substantial amount, which was $10 million. While the 2018 estate law also states that the children of
the deceased will receive the entire estate worth $10 million, and the estate would receive the whole
$11.18 million credit to apply as an estate tax offset because Ernie never utilized any of his unified
credit. As a result, no federal estate tax would be owed.
At the time of Death Ernie's fortune was valued at 20 million. "Once you have accounted for the Gross
Estate, certain deductions (and in special circumstances, reductions to value) are allowed in arriving at
your Taxable Estate.” (IRS, n.d) It sounds like the wife is getting at least half of the estate because
Ernie and Wendy's state of residence gives the surviving spouse an elective 50% share of the estate of
any married decedent regardless of what the will says. Wendy would have no tax liability if the estate
was transferred to her. "The marital deduction is unlimited; the state does not owe any federal estate
taxes if all the items includible in the gross estate (or all items except an amount equal to the basic
exclusion amount) pass to the surviving spouse." (Anderson, 2023) If the hand written note from
dinner is found to have merit, and the estate including the working oil interests which is valued at $20
million on his date of death. If Donna decided to keep all the money for herself, she may face an estate
tax liability. The law states "The Tax Cuts and Jobs Act of 2017 increased the unified credit to
$4,417,800, the tax on a basic exclusion amount of $11.18 million." (Anderson, 2023) I would then
ask if she planned to make any charitable deductions with the remaining estate. If she did not, she
could face tax on 8.2 million above the exclusion amount. Donna would then have a tax liability of
3.528 million.
The best-case scenario should they both decide to reach a settlement of 50% of the estate to each party
there would be no tax implication as it would be under the 11.18 million thresholds set by the Tax Cuts
and Jobs Act of 2017.
It is a conflict of interest to represent both on tax engagements. I know that it would not be pertinent to
talk about one or the other's financial situation without permission from either party.
With the price of oil falling and the estate losing its value at the valuation date there would still be no
tax liability for either party should they choose to split the estate.
Anderson, Kenneth and Hulse, David and Rupert, Timothy Pearson (2023) Taxation 2023
Corporations, Partnerships, Estates & Trusts Retrieved on:
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