What is the taxable estate for a woman who gives $1 million gifts yearly for five years and has a gross estate of $10 million?

To determine the taxable estate, we start with the gross estate value and then apply any allowable deductions, including gifts made during life. In this scenario, the woman has a gross estate of $10 million and has gifted $1 million each year for five years, totaling $5 million in gifts.

Gift tax exclusions are important in this context. For the years in question, a gift tax exclusion amount allowed per recipient annually would generally apply. For example, if the exclusion is $15,000 per person per year (assuming current limits), gifts above this amount would be taxable. However, in this scenario, the entire amount of the gifts given would be subject to reduction from the estate as they were made during her lifetime.

The total amount gifted ($5 million) reduces the gross estate of $10 million, resulting in a taxable estate of $5 million. Yet, when also considering the unified credit against estate and gift taxes available at the time of death, which could further reduce tax liability, the calculations could adjust. It's essential to include complex factors like any applicable deductions and credits on the actual estate tax form to arrive at the final taxable estate.

If we assume there are exemptions or deductions not accounted for in the estimation of the taxable estate calculation, this