What is the total taxable estate if a wife inherits a $12 million estate and later has a gross estate of $24.9 million, considering proper elections are made?

To determine the total taxable estate, it's essential to understand how the gross estate and the applicable deductions work together, particularly in the context of estate tax calculations.

In this scenario, the wife inherits a $12 million estate. It’s important to recognize that the gross estate includes the entirety of the estate at the time of her passing, which is stated to be $24.9 million. However, to calculate the taxable estate, we need to consider the estate tax exemptions and any relevant deductions that can be applied, which reduce the gross estate amount to arrive at the taxable estate.

Given that the answer provided focuses on a total taxable estate of $1.74 million, this implies that after applying the relevant deductions and exemptions to the gross estate of $24.9 million, there is a significant reduction in the amount ultimately subject to taxation. For instance, the federal estate tax exemption allows an estate to be deducted from the gross amount, and if the exemptions surpass the calculated assets of the gross estate, this will dramatically lower the taxable estate figure.

In this instance, a key factor contributing to the substantially reduced taxable estate could be the Spousal exemption, allowing transfers between spouses to be tax-free. Therefore, if proper elections, such as portability of exemption and