Also known as: adjusted gross estates · AGE
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A value obtained by subtracting from a decedent's gross estate the deductions permitted under sections 2053 and 2054 for funeral and administration expenses, debts, claims, and losses. This figure serves as the base for applying percentage tests in provisions such as section 303 stock redemptions.
Ava Adebayo died owning shares in Alliance Holdings worth $400,000. After subtracting allowable funeral and administration expenses plus debts, her adjusted gross estate totaled $1,000,000. Because the shares exceeded 35 percent of that adjusted gross estate, the estate could redeem a portion of the stock to pay taxes and expenses without dividend treatment.
Angela Acosta's estate held stock in two corporations. The executor combined the values because each corporation met the 20 percent inclusion threshold. The combined amount satisfied the more than 35 percent test measured against the adjusted gross estate after section 2053 and 2054 deductions.
Adam Anderson's gross estate was valued at $2,200,000. After subtracting claims, debts, and administration expenses under the permitted sections, the adjusted gross estate stood at $1,800,000. The executor used this reduced figure to determine whether a redemption of Alpine Mining stock qualified for favorable treatment.
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Audrey Ashton's estate included Astra Aerospace stock valued at $700,000. Deductions for expenses and debts reduced the gross estate to an adjusted gross estate of $1,900,000. The stock fell short of the 35 percent threshold, so the redemption proceeds were treated as a dividend.
Antonio Alvarado's executor paid substantial administration expenses after death. These deductions lowered the adjusted gross estate below the level needed for the 35 percent test on Aether Technologies shares. The redemption therefore lost its favorable tax treatment.
Adrian Aguilar's estate consisted partly of community property. After removing the surviving spouse's half and applying section 2053 and 2054 deductions, the adjusted gross estate was calculated. The remaining corporate stock then met the percentage test for redemption treatment.
It is the gross estate reduced by the deductions allowed under sections 2053 and 2054 for funeral and administration expenses, claims, debts, and losses. This reduced amount serves as the denominator when testing whether stock included in the estate meets the more than 35 percent threshold.
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Yes, provided each corporation satisfies the 20 percent inclusion requirement. The values are then combined and compared against the single adjusted gross estate figure after the permitted deductions.
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No. The Code uses the gross estate minus sections 2053 and 2054 deductions without labeling the result as adjusted gross estate, yet the phrase is commonly employed for convenience when applying the section 303 percentage test.
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