The total value of a deceased person's assets that are subject to taxation - minus liabilities and minus the prescribed tax-deductible portion of assets left behind by the deceased. The following items can be deducted to determine the taxable portion of the estate: funeral expenses paid out of the estate, debts owed by the deceased at the time of death and value of the assets passed on to the deceased's spouse. The taxes imposed on the taxable portion of the estate are then paid out of the estate itself.