ACC 317 advance federal taxation. Ch 27.
35 carl made the following transfers during 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 by a former wife.
· In consideration of their upcoming marriage, gave Lindsey (age 21) a $90,000 convertible.
· Purchased a $100,000 certificate of deposit listing title as “carl, payable on proof of death to Lindsey.
· Established a joint checking account with his wife, Lindsey, in December of the current year with $30,000 of funds he inherited from his parents. In January of the following year, Lindsey withdrew $15,000 of the funds.
· Purchased for $80,000 a paid-up insurance policy on his life (maturity value of $500,000). Carl designated Lindsey as the beneficiary.
· Paid $13,400 to a college for his niece’s tuition and $6,000 for her room and board. The niece isn’t carl’s dependent.
· Gave his aunt $22,000 for her gallbladder operation. The aunt is not carl’s dependent
What are carl’s taxable gifts for the current year?
39 at the time of his death this year on September 4, Kenneth owned the following assets.
| Fair market value | |
| City of Boston bonds | $2,500,000 |
| Stock in Brown corp | $900,000 |
| Promissory note issued by brad (Kenneth’s son) | $600,000 |
In Oct, the executor of Kenneth’s estate received the following: $120,000 interest on the city of Boston bonds ($10,000 accrued since September 4) and $7,000 cash dividend on the brown stock (date of record was Sept 5). The declaration date on the dividend was Aug 12.
The $600,000 loan was made to brad in late 2010, and he used the money to create a very successful business. The note was forgiven by Kenneth in his will. What are the estate tax consequences of these transactions?
42. 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 distribution consists of the following:
| · Employer contributions | · $900,000 |
| · Matthew’s after-tax contributions | · $600,000 |
| · Income earned by plan | · $500,000 |
Matthew was covered by his employer’s group term life insurance plan for employees. The $200,000 proceeds are paid to Olivia, the designated beneficiary.
· A. What are the estate tax consequences
· B. The income tax consequences
· Would the answer to part A change if Olivia was Matthew’s surviving spouse (not his daughter)? Explain.
44. In 2005, using $2.5 million in community property, Quinn creates a trust, life estate to his wife, Eve, and remainder to their children. Quinn dies in 2009 when the trust is worth $3.6 million, and Eve dies in 2013 when the trust is worth $5.6 million.
A. Did Quinn make a gift 2005? Explain?
B. How much, if any, of the trust is included in quinn’s gross estate in 2009.
C. How much, if any, of the trust is included in eve’s gross estate in 2013
D. Would any of the above answers change if Quinn had used his separate property (rather than community property) when he created the trust? Explain.
49. in 2002, 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 2013 when the real estate is worth $2.9 million. Gordon and Fawn are brother and sister.
A. Did a gift occur in 2002? Explain?
B. What if any are the estate tax consequences in 2013?
C. Under part (b), would your answer change if it was Fawn (not Gordon) who died in 2013? Explain.
