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While probabting, I am having trouble with the Inheritance Tax Return regarding the calcluation of tax and a charitable deductio
Philadelphia, PA
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Posted 8 months ago in Probate
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Good Morning. I am having a calculation issue that I am hoping you can me me with.
The will provides (1) inheritance tax is to be paid as an expense of the Estate; and (2) Charity is to receive 5% of the Residue. Under PA Form 1500 you First calculate the 5% Charity and deduct that amount to get your Taxable Amount. However, the Testator wants the Inheritance Tax paid BEFORE calculating the 5%. Example: Gross Estate: 100,000 5% Charity 5,000 Taxable: 95,000 Tax at 4.5% 4,275 Therefore, Residue is 90725 and Charity should only get 4536.25. But then the taxes paid are not right. The math is circular. Thank you in advance. - Is this your question? Add additional information Answers (1)
Steve Fromm
This attorney is licensed in Pennsylvania.
Posted 2 months ago.
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You must look to the tax allocation clause in the will. Generally, taxes are paid from the taxable assets of the estate and the charitable bequest is calculated and paid without reduction for taxes. So you need to look at the tax allocation clause in the will or trust to determine the proper calculation.
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