What constitutes taxable estate?

The taxable estate is defined as the gross estate minus allowable deductions. The gross estate includes the total value of all assets owned by an individual at the time of their death, such as real estate, investments, cash, and other property. From this gross estate, certain deductions can be applied—including debts, funeral expenses, administrative expenses, and bequests to surviving spouses or charity—resulting in the taxable estate, which is the amount subject to estate tax.

This distinction is crucial in determining what portion of the estate may be taxed. It emphasizes the importance of allowable deductions in calculating the final estate tax liability, directly impacting how much tax will ultimately be owed by the estate.