Lesson 6 Tax 507

Writing Assignments

Tammy Testate died on January 1st of last year (assume 2014) at the age of 65. Her gross estate totaled $8,500,000. Among her gross estate’s assets was an IRA account with her estate named as the designated beneficiary. The IRA totaled $1,500,000 at the time of her death and consists entirely of amounts not previously taxed. She had not yet begun to take distributions from the IRA at the time of her death. Her estate has deductible funeral and administration expenses of $175,000 and no other deductions or adjusted taxable gifts. She will leave her entire residuary estate to her life partner (they never married) Tommy.  Assume for simplicity that the state has no estate or income taxes applicable to the estate or the IRA distributions. Assume the IRA will be distributed in 5 annual installments beginning this year.

Compute the IRC Section 691(c) deduction for him as he takes the IRA distribution for 2014.