why (1-Tg) in numerator when it is still paid by donor?

When paid by receiver

numerator is reduced by (1-Tg), got it but

When paid by Donor

why numerator still has (1-Tg)?

Tg = Gift tax on the estate. (And the estate transfer occurs only after the gift tax is paid).

In any case that needs to be paid. So (1-Tg) will always apply.

Now if the DONOR decides he likes you the DONEE too much, and decides to pay the gift tax on your behalf - then the numerator changes to (1-Tg + Tg*Te) - because you get an additional amount of money (as DONEE, recipient) on which you end up paying ONLY the estate tax.

Appreciate it cpk Thanks a lot