This question is about PWM and inheritance taxes. I am not going to write the whole question but the issue I am having is this. They present us with information about how much wife would need to transfer to her husband so that he can reach his wealth goal. The amount is 2M USD. We are also presented with various types of tax rates (spousal gift tax, spousal inheritance tax, and other types). Below the table it says the following:
“Note: All taxes are due immediately at the time of the transfer and are paid for by the recipient.”
The solution is fairly simple. You take the 2M USD and divide it by 1 - tax rate (20% in this case) and you get 2.5M USD. My mistake is that I have applied both spousal inheritance and spousal gift tax to the 2M USD and I got a larger and incorrect number. So my question is, why do we not apply here the gift tax as well? Does it have to to something with community property rights regime they are living in?
