Which statement best describes "estate tax base"?

The concept of "estate tax base" refers to the total value that is subject to estate tax upon a person's death. This value is not simply limited to the assets that were owned at the time of death, which would be the taxable estate, but also includes adjusted taxable gifts made by the decedent during their lifetime.

When calculating the estate tax base, the taxable estate—which encompasses assets like real estate, investments, and personal property—is considered along with any adjusted taxable gifts. These are gifts that exceed the annual exclusion amount and have been given within a certain period before death; they can increase the estate tax liability. The adjusted taxable gifts are added back to the taxable estate to arrive at the total estate tax base.

This understanding reflects the comprehensive nature of the estate tax rules, which aim to capture both the wealth that remains at death and that which has been transferred during life, preventing individuals from circumventing tax liabilities through planning or gifting strategies. Therefore, the inclusion of adjusted taxable gifts in calculating the estate tax base accurately describes the total value subject to estate taxation, making this option the most accurate representation of what constitutes an estate tax base.