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Question: In 2017, Christian wants to transfer as


In 2017, Christian wants to transfer as much as possible to his four adult married children (including spouses) and eight minor grandchildren without using any unified transfer tax credit.
a. How much can Christian give?
b. What if Christian’s wife, Mia, joins in the gifts?
c. Express your computations for parts (a) and (b) as Excel commands.


> The Biltmore Trust is a simple trust. Crawford is its sole beneficiary. In the current year, the trust earns $3,200 in taxable interest and $8,000 in tax exempt interest. In addition, the trust recognizes a $2,500 long-term capital gain. The trustee asse

> For 2017, the Guess Trust retains all of its income items, which include only $100,000 of net investment income and $40,000 of profits from an active business operation. Guess incurs an additional tax on net investment income (NIIT) of: a. $5,320. b. $3,

> For 2017, the Wes Trust reports $100,000 of AMT income before the annual exemption. The AMT for the year is: a. $19,734. b. $21,308. c. $26,000. d. $28,000.

> Grace Lang was employed as a waitress at the Pancake House in Grand Bay, Alabama. While working the morning shift on March 7, 2009, one of Grace’s customers left her a Florida lottery ticket as a tip. When Grace discovered that she had won part of the Fl

> Before her death, Lucy entered into the following transactions. a. Lucy borrowed $600,000 from her brother, Irwin, so that Lucy could start a business. The loan was on open account, and no interest or due date was provided for. Under applicable state law

> In May 2017, Dudley and Eva enter into a property settlement preparatory to the dissolution of their marriage. Under the agreement, Dudley is to pay Eva $6 million in satisfaction of her marital rights. Of this amount, Dudley pays $2.5 million immediatel

> Using property she inherited, Myrna makes a 2017 gift of $6.2 million to her adult daughter, Doris. Neither Myrna nor her husband, Greg, has made any prior taxable gifts. Determine the gift tax liability if: a. The election to split gifts is not made. b.

> Indicate whether each of the following statements is true or false. a. The government never pays a taxpayer interest on an overpayment of tax. b. The IRS can compromise on the amount of tax liability if there is doubt as to the taxpayer’s ability to pay.

> Jesse dies intestate (i.e., without a will) in May 2017. Jesse’s major asset is a tract of land. Under applicable state law, Jesse’s property will pass to Lorena, who is his only child. In December 2017, Lorena disclaims one-half of the property. In June

> Carl made the following transfers during the current year. What are Carl’s taxable gifts for the current year? • Transferred $900,000 in cash and securities to a revocable trust, life estate to himself and remainder interest to his three adult children b

> In each of the following independent situations, indicate whether the alternate valuation date can be elected. Explain why or why not. Value of Gross Estate Estate Tax Liability Date of Six Months Date of Six Months Decedent Death Later Death Later

> Under Rowena’s will, Mandy (Rowena’s sister) inherits her property. One year later, Mandy dies. Based on the following independent assumptions, what is Mandy’s credit for the tax on prior transfers? a. The estate tax attributable to the inclusion of the

> Roy dies and is survived by his wife, Marge. Under Roy’s will, all of his otherwise uncommitted assets pass to Marge. Based on the following property interests, determine the marital deduction allowed to Roy’s estate. a. Timberland worth $1.2 million own

> While vacationing in Florida in November, Sally was seriously injured in an automobile accident. Sally died several days later. How are the following transactions handled for tax purposes? a. Bruce, Sally’s son and executor, incurred $6,200 in travel exp

> In each of the independent situations below, determine the transfer tax (i.e., estate and gift) consequences of what has occurred. (In all cases, assume that Gene and Mary are married and that Ashley is their daughter.) a. Mary purchases an insurance pol

> Assume the same facts as in Problem 42, except that Gordon and Fawn are husband and wife (not brother and sister). a. What are the gift tax consequences in 2012? b. What are the estate tax consequences in 2018? c. Under part (b), would your answer change

> In 2012, Gordon purchased real estate for $900,000 and listed title to the property as “Gordon and Fawn, joint tenants with right of survivorship.” Gordon predeceases Fawn in 2018 when the real estate is worth $2.9 million. Gordon and Fawn are brother an

> At the time of his death on July 9, Aiden was involved in the following real estate. Fair Market Value

> Which of the valuation penalties is likely to arise when an aggressive taxpayer reports: a. A charitable contribution? b. A business deduction? c. A decedent’s taxable estate?

> At the time of Matthew’s death, he was involved in the following transactions. • Matthew was a participant in his employer’s contributory qualified pension plan. The plan balance of $2 million is paid to Olivia, Matthew’s daughter and beneficiary. The di

> Assume the same facts as in Problem 38 with the following modifications. What amount is included in Alicia’s gross estate? • Mitch is killed in a rock slide while mountain climbing in November, and the insurer pays Alicia’s estate $400,000 before the end

> At the time of her death on September 4, Alicia held the following assets.

> At the time of his death this year on September 4, Kenneth owned the following assets. Fair Market Value City of Boston bonds…………………………………………………..$2,500,

> Kim, a wealthy Korean national, is advised by his physicians to have an operation performed at the Mayo Clinic. Kim is hesitant to come to the United States because of the possible tax consequences. If the procedure is not successful, Kim does not want h

> Bernice dies and, under a will, passes real estate to her surviving husband. The real estate is subject to a mortgage. For estate tax purposes, how is any marital deduction determined? Can Bernice’s estate deduct the mortgage in computing the taxable est

> Regarding the formula for the Federal gift tax (see Concept Summary 27.1), comment on the following observations. a. The annual exclusion is adjusted each year for inflation. b. The charitable and marital deductions play an important role. c. Some gratui

> In no more than three PowerPoint slides, indicate how the time value of money affects the application of the Federal unified transfer taxes. Prepare your slides for a 45-minute presentation at your school’s homecoming seminar, attended by wealthy alumni.

> Felipe will incur a $1 million Federal transfer tax when he passes a plot of land to Barbara, an unrelated friend. Felipe’s after-tax rate of return on his real estate investments is 3%. Compute the present value of the transfer tax if: a. Felipe transf

> An excise tax is a tax on the transfer of property. In the case of the Federal unified transfer tax, the excise tax imposes a tax when assets pass to another individual through lifetime gifts or amounts passing at death. Unlike the income tax, therefore,

> You overhear Matheus say, “I am so glad to be divorced from my cheating wife Larissa. She keeps two sets of books in her design business, and I wish the IRS would find out about it.” Is Matheus a candidate for the informant award program that is operated

> Three unmarried and childless sisters live together. All are of advanced age and in poor health, and each owns a significant amount of wealth. Each has a will that passes her property to her surviving sister(s) or, if no survivor, to their church. Within

> With regard to “life insurance” in the context of the Federal estate tax, comment on the following. a. What the term includes (i.e., types of policies). b. The meaning of “incidents of ownership.” c. When a gift occurs upon maturity of the policy. d. The

> At the time of Emile’s death, he was a joint tenant with Colette in a parcel of real estate. With regard to the inclusion of the realty in Emile’s gross estate, comment on the following independent assumptions: a. Emile and Colette received the property

> In each of the following independent situations, indicate whether the transfer is subject to the Federal gift tax. a. Asa contributes to his mayor’s reelection campaign fund. The mayor has promised to try to get some of Asa’s property rezoned from reside

> In connection with the filing of a Federal gift tax return, comment on the following. a. No Federal gift tax is due. b. The gift is between spouses. c. The donor obtained from the IRS an extension of time for filing his or her Federal income tax return.

> Regarding the gift-splitting election, comment on the following. a. What it is designed to accomplish. b. How the election is made.

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> At a local bank, Jack purchases for $100,000 a five-year CD listing title as follows: “Meredith, payable on death to Briana.” Four years later, Meredith dies. Briana, Meredith’s daughter, then redeems the CD when it matures. Discuss the transfer tax cons

> Gus (age 84) and Belle (age 18) are married early in the year. Late in the same year, Belle confronts Gus about his failure to transfer to her the considerable amount of property he previously promised. Gus reassures Belle that she will receive the prope

> On June 10, Ming states, “I filed my Form 1040 on April 5 and haven’t heard from the IRS since then, so I know I will not be audited!” Evaluate Ming’s assumption.

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> Included in Mary’s gross estate are the following assets: a. How much is included in her gross estate if the alternate valuation date is elected? b. Suppose all of Mary’s assets pass to her surviving husband? Fai

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> During an interview with an IRS official on Dateline, the interviewer asks, “So how do you decide which Forms 1040 get audited and which do not?” How should the IRS official respond, taking into account that only some of the audit selection process is pu

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> During 2017, Vasu wants to take advantage of the annual exclusion and make gifts to his 6 married children (including their spouses) and his 12 minor grandchildren. a. How much property can Vasu give away without creating a taxable gift? b. How does your

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> Lopez always had taken his Form 1040 data to the franchise tax preparers in a local mall, but this year, his friend Cheryl asked to prepare his return. Cheryl quoted a reasonable fee, and Lopez reasoned that, with finances especially tight in Cheryl’s ho

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> Christie is the preparer of the Form 1120 for Yostern Corporation. On the return, Yostern claimed a deduction that the IRS later disallowed on audit. Compute the tax preparer penalty that could be assessed against Christie in each of the following indepe

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