Wisconsin Lawyer: Wisconsin Lawyer December 2001: Wisconsin's New Estate Tax

December 01, 2001

Wisconsin Lawyer December 2001: Wisconsin's New Estate Tax - Figures

Wisconsin's New Estate Tax

Wisconsin's New Estate Tax

Figure 1
Federal Estate Tax and State Death Tax Credit Computation

	Situation 1	Situation 2	Situation 3
Gross Estate	$685,000	$737,170	$1,010,000
Less Deductions	(10,000)	(10,000)	(10,000)
Taxable Estate	675,000	727,170	1,000,000
Gross Estate Tax	220,550	239,853	345,800
Less Applicable Credit Amount (for 2000 and 2001)	220,550	220,550	220,550
Remaining Estate Tax	0	19,303	125,250
State Death Tax Credit	0	19,303	125,250
Balance Due IRS	0	0	92,050

Figure 2
IRS Table A – Unified Rate Schedule – Jan. 1, 2002

Column A	Column B	Column C	Column D
Taxable amount over	Taxable amount not over	Tax on amount in column A	Rate of tax on excess over amount in column A (%)
0	$10,000	0	18
$10,000	20,000	$1,800	20
40,000	60,000	8,200	24
60,000	80,000	13,000	26

80,000	100,000	18,200	28
100,000	150,000	23,800	30
250,000	500,000	38,800	32
500,000	750,000	155,800	37

750,000	1,000,000	248,300	39
1,000,000	1,250,000	345,800	41
1,250,000	1,500,000	448,300	43
2,000,000	2,500,000	780,800	49

2,500,000	------------	1,025,800	50

Figure 3
IRS Table B
Computation of Maximum Credit for State Death Taxes
(Based on federal adjusted taxable estate computed using IRS Table B Worksheet, Figure 3a)

(1)	(2)	(3)	(4)
Adjusted taxable estate equal to or more than -	Adjusted taxable estate less than -	Credit on amount in column (1)	Rate of credit on excess over amount in column (1)

0	$40,000	0	None
$40,000	90,000	0	0.8
90,000	140,000	$400	1.6
140,000	240,000	1,200	2.4
240,000	440,000	3,600	3.2

440,000	640,000	10,000	4.0
640,000	840,000	18,000	4.8
840,000	1,040,000	27,600	5.6
1,040,000	1,540,000	38,800	6.4
1,540,000	2,040,000	70,800	7.2

2,040,000	2,540,000	106,800	8.0
2,540,000	3,040,000	146,800	8.8
3,040,000	3,540,000	190,800	9.6
3,540,000	4,040,000	238,800	10.4
4,040,000	5,040,000	290,800	11.2

5,040,000	6,040,000	402,800	12.0
6,040,000	7,040,000	522,800	12.8
7,040,000	8,040,000	650,800	13.6
8,040,000	9,040,000	786,800	14.4
9,040,000	10,040,000	930,800	15.2
10,040,000	------------	1,082,800	16.0

Figure 3a
IRS Table B Worksheet Federal Adjusted Taxable Estate

1) Federal taxable estate (from Tax Computation, Form 706, line 3)	$__________
2) Adjustment	60,000
3) Federal adjusted taxable estate. Subtract line 2 from line 1. Use this amount to compute maximum credit for state death taxes in Table B.	$__________

Figure 4
Wisconsin's Fixed Exclusion Compared to Fluctuating Federal Exclusion

Year	Federal Exclusion Amount	Wisconsin Exclusion Amount	Federal Applicable Credit Amount	Wisconsin Applicable Credit Amount

1999	650,000	650,000	211,300	211,300
2000	675,000	675,000	220,550	220,550
2001	675,000	675,000	220,550	220,550
1/1/02	1,000,000	1,000,000	345,800	345,800
10/1/02	1,000,000	675,000	345,800	220,550
2003	1,000,000	675,000	345,800	220,550
2004	1,500,000	675,000	555,800	220,550
2005	1,500,000	675,000	555,800	220,550
2006	2,000,000	675,000	780,800	220,550
2007	2,000,000	675,000	780,800	220,550
2008	2,000,000	No Tax	780,800	No Tax
2009	3,500,000	No Tax	1,475,800	No Tax
2010	No Tax	No Tax	No Tax	No Tax
2011	1,000,000	146,800	345,800	345,800

Figure 5
Choosing a Bypass Arrangement

	Spouse 1 (S1)	Spouse 1 (S2)
Example 4: Each Spouse's Estate	$675,000	$675,000
Bypass: Wis. Exclusion	(675,000)	675,000
Bypass: Fed. Exclusion	Not Used
FET on S1's Death in 2002	0
WET on S1's Death in 2002	0
FET on S2's Death in 2002		0
WET on S2's Death in 2002		0

Example 5a: Each Spouse's Estate	1,000,000	500,000
Bypass: Wis. Exclusion	(675,000)	825,000
Bypass: Fed. Exclusion	Not Used
FET on S1's Death in 2002	0
WET on S1's Death in 2002	0
FET on S2's Death in 2002		0
WET on S2's Death in 2002		24,000

Example 5b: Each Spouse's Estate	1,000,000	500,000
Bypass: Wis. Exclusion	Not Used
Bypass: Fed. Exclusion	(1,000,000)	500,000
FET on S1's Death in 2002	0
WET on S1's Death in 2002	33,200
FET on S2's Death in 2002		0
WET on S2's Death in 2002		0

Example 6a: Each Spouse's Estate	1,000,000	1,000,000
Bypass: Wis. Exclusion	(675,000)	1,325,000
Bypass: Fed. Exclusion	Not Used
FET on S1's Death in 2002	0
WET on S1's Death in 2002	0
FET on S2's Death in 2002		85,150
WET on S2's Death in 2002		53,200
Total Estate Taxes in 2002		138,350

Example 6b: Each Spouse's Estate	1,000,000	1,000,000
Bypass: Wis. Exclusion	Not Used
Bypass: Fed. Exclusion	(1,000,000)	1,000,000
FET on S1's Death in 2002	0
WET on S1's Death in 2002	33,200
FET on S2's Death in 2002		0
WET on S2's Death in 2002		33,200
Total Estate Taxes		66,400

Example 7a: Each Spouse's Estate	2,000,000	2,000,000
Bypass: Wis. Exclusion	(675,000)	3,325,000
Bypass: Fed. Exclusion	Not Used
FET on S1's Death in 2002	0
WET on S1's Death in 2002	0
FET on S2's Death in 2002		933,200
WET on S2's Death in 2002		159,300
Total Estate Taxes in 2002		1,092,500

Example 7b: Each Spouse's Estate	2,000,000	2,000,000
Bypass: Wis. Exclusion	Not Used
Bypass: Fed. Exclusion	(1,000,000)	3,000,000
FET on S1's Death in 2002	0
WET on S1's Death in 2002	33,200
FET on S2's Death in 2002		793,500
WET on S2's Death in 2002		136,500
Total Estate Taxes in 2002		930,000