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1.
Al made the following gifts this year:
·
$400,000 to his daughter
·
$200,000 to his son
·
$50,000 to his grandson
·
$20,000 to City University.
Assume the tax rates for 2013 are in effect.
Compute Al’s taxable gifts.
Show your work.
2.
Al’s wife, Maria, has agreed to split the gifts (above).
Compute the taxable gift for each.
Show your work.
3.
Ten years ago, Clyde and his wife, Bonnie, purchased 100
shares of GE stock for $10,000, holding it as JTWROS.
Clyde paid for the stock entirely from his savings account.
Clyde died last year when the stock was worth $100,000.
How much will be included in Clyde’s estate?
Show your work.
4.
Ten years ago, John purchased 100 shares of JNJ stock for
$10,000, titling it JTWROS with his brother, Robert.
John paid $6,000 for the stock and Robert paid $4,000.
Robert died last year when the stock was worth $100,000.
How much will be included in Robert’s estate?
Show your work.
5.
Alice, Betty, and Candy are cousins.
They decided to form an investment club.
Each contributed $5,000 and the club purchased IBM stock.
Alice died last year.
At the time of her death, the stock had doubled in value.
How much will be included in her estate?
Show your work.
6.
Ten years ago, Amanda created an irrevocable trust and funded
it with $500,000.
Amanda died last year.
Assuming she made no other taxable gifts, how much is in her
gross estate?
Show your work.
7.
Two years ago, Anthony created an irrevocable trust and
transferred in his life insurance policy that had a death benefit
of $3,000,000.
The trust was named the owner and beneficiary.
Anthony died last year.
Assuming he made no other taxable gifts, how much is in his
gross estate?
Show your work.
8. - 10.
Janice and Jacob are a married couple who have come to you for
financial and estate planning.
Their primary goal is to minimize estate and gift taxes.
Their children are married and doing well so their main concern
is to maintain their lifestyle regardless of which of them passes
first.
They love their Uncle Sam but would like to disinherit him if at
all possible.
Janice and Jacob own the following assets together:
(You may assume that they do not live in a community property
state.)
·
Checking Account
$110,000
·
Savings Account
$100,000
·
Municipal Bonds
$200,000
·
Primary Residence
$7,000,000
·
Vacation Home
$4,940,000
Jacob owns the following assets in his own name:
·
IRA Account
$2,000,000
·
Mutual Fund Accounts
$1,500,000
·
401(k) Account
$1,500,000
·
Little Red Corvette
$100,000
Janice owns the following assets in her own name:
·
Credit Union Account
$500,000
·
Stock Account
$2,500,000
·
403(b) Account
$1,500,000
·
Lexus
$120,000
Janice and Jacob have a personal loan account (Joint) with a
balance of $100,000.
They estimate that funeral expenses would run approximately
$25,000 (each).
They have a mortgage on their residence in the amount of
$2,000,000.
Five years ago, Jacob purchased a VUL policy with a Death
Benefit of $5,000,000.
Two years ago, Janice purchased a UL policy with a Death
Benefit of $2,500,000.
Each named their spouse as the primary beneficiary.
8.
What is the value of Jacob’s gross estate? In his adjusted gross
estate? Show how you have treated each asset and what you
have included in his estate.
9.
What is the value of Janice’s gross estate?
In her adjusted gross estate? Show how you have treated each
asset and what you have included in his estate.
10. In view of their combined estate values, and knowing
that one of their planning objectives is the reduction of estate
taxes, what are some estate planning techniques you might
recommend to the Jacob and Janice? Provide at least 2 detailed
recommendations. Each is worth up to 10 points. You may
offer 3 additional (but different) recommendations for 10 points
each, if you wish.

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1.Al made the following gifts this year·$400,000 to his d.docx

  • 1. 1. Al made the following gifts this year: · $400,000 to his daughter · $200,000 to his son · $50,000 to his grandson · $20,000 to City University. Assume the tax rates for 2013 are in effect. Compute Al’s taxable gifts. Show your work. 2. Al’s wife, Maria, has agreed to split the gifts (above). Compute the taxable gift for each. Show your work. 3. Ten years ago, Clyde and his wife, Bonnie, purchased 100 shares of GE stock for $10,000, holding it as JTWROS.
  • 2. Clyde paid for the stock entirely from his savings account. Clyde died last year when the stock was worth $100,000. How much will be included in Clyde’s estate? Show your work. 4. Ten years ago, John purchased 100 shares of JNJ stock for $10,000, titling it JTWROS with his brother, Robert. John paid $6,000 for the stock and Robert paid $4,000. Robert died last year when the stock was worth $100,000. How much will be included in Robert’s estate? Show your work. 5. Alice, Betty, and Candy are cousins. They decided to form an investment club. Each contributed $5,000 and the club purchased IBM stock. Alice died last year. At the time of her death, the stock had doubled in value. How much will be included in her estate?
  • 3. Show your work. 6. Ten years ago, Amanda created an irrevocable trust and funded it with $500,000. Amanda died last year. Assuming she made no other taxable gifts, how much is in her gross estate? Show your work. 7. Two years ago, Anthony created an irrevocable trust and transferred in his life insurance policy that had a death benefit of $3,000,000. The trust was named the owner and beneficiary. Anthony died last year. Assuming he made no other taxable gifts, how much is in his gross estate? Show your work. 8. - 10. Janice and Jacob are a married couple who have come to you for financial and estate planning. Their primary goal is to minimize estate and gift taxes. Their children are married and doing well so their main concern
  • 4. is to maintain their lifestyle regardless of which of them passes first. They love their Uncle Sam but would like to disinherit him if at all possible. Janice and Jacob own the following assets together: (You may assume that they do not live in a community property state.) · Checking Account $110,000 · Savings Account $100,000 · Municipal Bonds $200,000 · Primary Residence $7,000,000 · Vacation Home $4,940,000
  • 5. Jacob owns the following assets in his own name: · IRA Account $2,000,000 · Mutual Fund Accounts $1,500,000 · 401(k) Account $1,500,000 · Little Red Corvette $100,000 Janice owns the following assets in her own name: · Credit Union Account $500,000 · Stock Account
  • 6. $2,500,000 · 403(b) Account $1,500,000 · Lexus $120,000 Janice and Jacob have a personal loan account (Joint) with a balance of $100,000. They estimate that funeral expenses would run approximately $25,000 (each). They have a mortgage on their residence in the amount of $2,000,000. Five years ago, Jacob purchased a VUL policy with a Death Benefit of $5,000,000. Two years ago, Janice purchased a UL policy with a Death Benefit of $2,500,000. Each named their spouse as the primary beneficiary. 8. What is the value of Jacob’s gross estate? In his adjusted gross estate? Show how you have treated each asset and what you
  • 7. have included in his estate. 9. What is the value of Janice’s gross estate? In her adjusted gross estate? Show how you have treated each asset and what you have included in his estate. 10. In view of their combined estate values, and knowing that one of their planning objectives is the reduction of estate taxes, what are some estate planning techniques you might recommend to the Jacob and Janice? Provide at least 2 detailed recommendations. Each is worth up to 10 points. You may offer 3 additional (but different) recommendations for 10 points each, if you wish.