If the amount of federal estate tax due on an estate valued at $ 1.35

Question

If the amount of federal estate tax due on an estate valued at $ 1.35 million is $ 437,000 plus 43 percent of the value of the estate in excess of $ 1.25 million, then the federal tax due is approximately what percent of the value of the estate?

A. 30%

B. 35%

C. 40%

D. 45%

E. 50%

A. 30%

B. 35%

C. 40%

D. 45%

E. 50%

generis · Accepted Answer

An estate worth $1,350,000 is subject to two tax assessments:

1) one for a flat $437,000 (paid no matter what), and

2) another for 43 percent of  any amount of estate value that exceeds  $1,250,000
-- This estate's value exceeds the cutoff by $100,000:
  ($1,350,000 - 1,250,000) = $100,000   
-- A 43% tax is DUE on the excess $100,000 = $43,000

#1 + #2 = total tax due
$437,000 + $43,000 = $480,000 total tax due

Tax due as a percent of the value of the estate (get rid of four zeros):

\frac{TotalTaxes}{Estate Value}=(\frac{48}{135}*100)\approx(.35*100)

is approximately 35%

Answer B

JeffTargetTestPrep · Answer

Let’s determine the tax due:

437,000 + 0.43(1,350,000 - 1,250,000)

437,000 + 0.43(100,000) = 437,000 + 43,000 = 480,000

Thus, the tax due is approximately 480,000/1,350,000 = 48/135 ≈35%.

Answer: B

GMATMBA5 · Answer

Value of estate =  1.35*10^6 
Tax =  437000+0.43(0.1*10^6)  =  480000

Percentage of tax due =  \frac{480000}{(1.35*10^6)}*100  ≈  35 %

hvelas93 · Answer

Does anyone have tips for estimating? My calculations brought me to 480000/1350000 --> 48/135 but then I froze I was stuck between 30% and 40%. As I started typing this I realized I could quickly calculate 40% of the denominator to help me ballpark. Any other techniques for estimation?

sachinsavailable · Answer

it's easier to calculate this question in millions.

Hence

1.35 million X x%= 0.437 million+ 43% of (1.35 million-1.25 million)

1.35 million X x% =0.44 million+ 43% of (0.10 million)

1.35 million X x% = 0.44 million + some small value (in millions)

x= 32.xxx% (should be more than 32% since we didnot calculate 43% of 0.10 million)

Closest answer is 35%

hence

verydisco · Answer

I think the major hiccup in solving this question is the 480,000/1350000 figure. We simplify it to 48/135, but this seems like a very inconvenient fraction. Here's what I do sometimes to solve such complex fractions.

Round these values off to the closest convenient values, which in this case is 50/150, which is 33.33%. Since we increased the denominator significantly, the value has to be greater than 30%. Also, to arrive at 40%, we'd need the fraction to be 40/100 or 50/125. Clearly, the value lies between 30% and 40%, which is 35%.

Jsound996 · Answer

hvelas93

Yes, use the answer choices to determine which is the correct answer choice, and use percentages of 10 to help do the math quickly:
The total estate is 1.35 million, you can easily find 30% and 40% because it's 3*10% and 4*10%.
10% of 1.35 million is 135,000
30% of 1.35 million is 405,000 (too small)
40% of 1.35 million is 540,000 (too large)

Fyi: if you know what 10% is (135,000), you can divide that value by 2 to find 5% of 1.35 million (67,500)
So you can add 405,000 + 67,500 = 472,500

And you can take it even further and divided 135,000 by 10 to find 1% = (13,500)
That is especially useful when you're trying to find percentages that are a pain to divide via long division, such as 13% of X, or 53% of Y , and that rounding can easily give you the wrong answer choice of the answers are very close together

Basshead · Answer

If the amount of federal estate tax due on an estate valued at $ 1.35 million is $ 437,000 plus 43 percent of the value of the estate in excess of $ 1.25 million, then the federal tax due is approximately what percent of the value of the estate?

A. 30%

B. 35%

C. 40%

D. 45%

E. 50%

$437,000 + $43,000 = 480,000

480,000 / 1,350,000 = 48 / 135

1/10 of 135 = 13.5
48 is approximately 3.5 * 13.5

Therefore the tax due is approximately 35%. Answer is B.

rounakkedia172 · Answer

i am pretty sure many of you have conveniently have arrived at 48/135 fraction, here is my approach I use to handle tough fraction to percent quetions:
48/135 = 16/45 or
we can right is as 32/90 = 32+3.2/90+9 = 35.2/99 ~ 35%

ueh55406 · Answer

It's not the question, it's the values that really messes with you in question like these. had it been simpler values this is a sub-600.

tax= 437k + 43% of (1.35-1.25) Mil $ <<< let this be A

total value is 1.35 Mil$ << Let this be B

question is:-  A is what % of B . easy, only if the values weren't a travesty.

can someone share how to simplify such values when we do have the leverage to approximate, like in this question. Thanks

GmatKnightTutor · Answer

GMAT Problem Solving - Looking for the correct answer CHOICE (not the EXACT answer)

https://www.youtube.com/watch?v=mEM3xT9edmY

hassan233 · Answer

The second I started trying to solve 48/135 I realized it was going to be difficult. 
At this point, I did 10% of 135, which I can quickly calculate to be 13.5
Then I know that 30% is 3*10% = 13.5 * 3 = 40.5... eh, that is pretty far from 48
Then I try 35%, which is 30% + 5%, which is 40.5 + .5(13.5) = 41.5 + 6.75 = 47.25, wow that is pretty close to 48; 35% is my answer.

Note, on the real exam, I discourage dealing with the .25 and even sometimes the .5. Oftentimes, they are not needed and they take additional time to deal with.

avigutman · Answer

Video solution from Quant Reasoning: Subscribe for more: https://www.youtube.com/QuantReasoning? ... irmation=1 https://www.youtube.com/watch?v=mmYlnAntMk0

reyzr23 · Answer

How did you add 3.2 to the num? Could you explain pls

Abhishek009 · Answer

T = (1.35 - 1.25)*10^5*\frac{43}{100} + 437000 => 480000

=\frac{480000}{1350000}*100

= 35 %, Answer will be (B)

Ophelia__ · Answer

10% of 135 is 13.5

13.5*4 = 54 too much
13.5*3 = 40.xx too little

so has to be 35%

bumpbot · Answer

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If the amount of federal estate tax due on an estate valued at $ 1.35

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If the amount of federal estate tax due on an estate valued at $ 1.35

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