Detailed Answer
(a) The requirement is to determine whether federal
estate tax returns must be filed for the estates of Eng and Lew.
For a decedent dying during 2013, a federal estate tax return
(Form 706) must be filed if the decedent’s gross estate exceeds
$5,000,000. If a decedent made taxable lifetime gifts such that
the decedent’s applicable transfer tax credit was used to offset the
gift tax, the ($5,000,000) exemption amount must be reduced by
the amount of taxable lifetime gifts to determine whether a return
is required to be filed.
Since Lew made no lifetime gifts and the value of Lew’s
gross estate was only $4,800,000, no federal estate tax return is
required to be filed for Lew’s estate. In Eng’s case, the
$5,000,000 exemption is reduced by Eng’s $400,000 of taxable
lifetime gifts to $4,600,000. However, since Eng’s gross estate
totaled only $3,600,000, no federal estate tax return is required to
be filed for Eng’s estate.