Question 1. In2005, Noahand Kellyacquirereal estatefor $2,000,000,withNo

1. In2005, Noahand Kellyacquirereal estatefor $2,000,000,withNoah furnishing$400,000 ofthepurchase priceandKelly providingthebalance. Titleto theproperty islistedas: “Noahand Kelly,equal tenantsincommon.” Noahdiesfirstin2013, whenthereal estateisworth $4,000,000.

a. Werethere anytax consequencesin 2005?Explain.

b. Howmuch, asto thereal estate,is includedin Noah’sgross estate?

c. Astoparts a.andb., woulditmake anydifferencewhether Noahand Kellyarebrother andsister orhusbandand wife?

.

2. Murrayownsan insurancepolicyon thelife ofhisfather, Logan.UponLogan’s death,the policyproceedsof $2,000,000 arepaidtothedesignatedbeneficiary,Grace.Whatarethetransfertaxconsequencesresultingfrom Logan’sdeath,basedonthefollowingindependentassumptions?

a. Graceis Murray’sdaughter.

b. GraceisMurray’swife.

c. Whatarethe taxconsequences ifMurraydies first(i.e., predeceasesbothGrace andLogan)?

3. Atthetime ofherdeath, Amberownsproperty worth$5,000,000. Otherinformationregarding heraffairsis asfollows.

Unpaidpledge tothebuilding fundofher church $ 50,000

Collegegraduation giftshehad promisedhergrandson 20,000

Localpropertytaxes owed(accruedprior todeath) 100,000

Casualtylosstouninsuredvacationhome(fireoccurred onemonthbeforedeath) 500,000

Mortgageowed onpersonal residence 800,000

Allof theseitems (exceptthe casualtyloss)were paidby herestate, andnonewere deductedon Form1041 (incometaxreturnoftheestate). WhatisAmber’staxableestate?

4. Atthe timeof Clint’sdeath, partof hisestate consistsof thefollowing.

• RothIRA (valueof$1,000,000) withJennifer asthe designatedbeneficiary.

• Land(worth $3,000,000)held injoint tenancywithJennifer. Jenniferis Clint’swife and originallyfurnishedthepurchaseprice.

• Building(worth $3,000,000)held asequaltenants incommon withJenniferand Dana.Dana is Clint’smother,andsheoriginallypurchasedtheproperty.

UnderClint’s will,allof hisproperty passestohis wife,Jennifer.How muchmaritaldeduction isClint’sestate allowed? ClintandJenniferliveinTennessee.

5. Calvin’swillpasses $800,000of cashto hiswidowed sister,Muriel. Theestate taxattributableto thecash is $110,000.Murieldiesfiveyearslater,andtheestatetaxgeneratedbythe$800,000is$100,000.Howmuchofa creditfortaxonpriortransferswillMuriel’sestatebeallowed?

6. Asreflected bythetax law,congressionalpolicyrelativetotheFederalgift andestatetaxeshasbeenveryinconsistent.Commenton thispolicyregarding thefollowing timeperiods.

a. FromoriginalenactmentofthesetaxesuptotheTaxReformActof1976.

b. Fromthe TaxReform Actof 1976to EGTRRA.

c. FromEGTRRAto theTax ReliefAct (TRA)of 2010.

d. FromTRA of2010 toATRA of2012.

7. TheFederal giftand estatetaxes wererestructured in1976 intotheunified transfertax. Theobjective ofthechangewas toeliminate thetaxdifference betweentransfers duringlife (gifttax) andat death(estatetax). Doesthisuniformityof treatmentcurrently exist?In thisregard, commenton thefollowing differencesbetweenthe twotaxes.

a. Applicableunifiedtransfer taxcredit.

b. Applicableunified transfertax rates.

c. Availabilityof thecharitable andmarital deductions.

d. Availabilityoftheannualexclusion.

8. Afterbeing diagnosedwith aterminalillness,Jude(awidower)makesgiftsofallofhisassets(over$6millioninvalue)tofamilymembersanddiesshortlythereafter.Basedonthesefacts,commentonthefollowingassumptions.

a. Becausethe Federalgifttax isimposedon thedonorand Judehasno assets,anygift taxthat isdue isavoided.

b. BecauseJudediedwithout anyassets,the Federalestatetax isavoided.

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