what is the applicable fraction
Inclusion Ratio and Applicable Fraction The inclusion ratio is used to determine the actual tax rate. The inclusion ratio times the top rate produces the actual GSTT rate. The inclusion ratio is defined as one minus the applicable fraction. Sec. 2642. The applicable fraction is a formula designed to reflect the property that will be taxed under the GSTT rules. It includes the GSTT exemption, the property value, the estate tax paid and the charitable deduction. In effect, it is used to reduce the total value of assets subject to tax.