1. David Collins died during the current year. The personal representative of David's estate reviewed the following assets: Stocks in David's name only: 2,000,000 Investment property in a trust that David has the right to revoke: 1,500,000 Primary home owned jointly with his wife (wife did not contribute to the purchase): 1,000,000 Insurance policy owned / insuring David with the proceeds payable to his daughter: 800,000 Vacation home owned jointly with his son (son did not contribute to the purchase): 500,000 Cash placed in an irrevocable trust by David 8 years ago with David's friend as trustee: 600,000 What is the value of David's gross estate for estate tax purposes? a. $3,500,000 b. $4,250,000 c. $5,300,000 d. $6,400,000

1. David Collins died during the current year. The personal representative of David's estate reviewed the following assets: Stocks in David's name only: 2,000,000 Investment property in a trust that David has the right to revoke: 1,500,000 Primary home owned jointly with his wife (wife did not contribute to the purchase): 1,000,000 Insurance policy owned / insuring David with the proceeds payable to his daughter: 800,000 Vacation home owned jointly with his son (son did not contribute to the purchase): 500,000 Cash placed in an irrevocable trust by David 8 years ago with David's friend as trustee: 600,000 What is the value of David's gross estate for estate tax purposes? a. $3,500,000 b. $4,250,000 c. $5,300,000 d. $6,400,000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Cora, 79, has an estate that includes her personal residence valued at $120,000 and $18,000 in a bank account that is solely in her name. She would like to arrange her estate so that she maintains exclusive control of the assets during her lifetime, but at her death the assets will pass to her friend, Mabel, outside of probate. Based on Cora's goals and situation, which of the following are correct statements about will substitutes that she could use? She should put her bank account in tenancy in common with Mabel. She should title her personal residence in joint tenancy with her friend, Mabel. She should execute a will that names her friend, Mabel, as the legatee of the bank account and the devisee of the personal residence. She should place the bank funds in a payable on death (POD) account with Mabel as beneficiary. She should change the title on her personal residence to indicate a life estate reserved for her lifetime and a remainder to her friend, Mabel. A)IV and V…
Required Information [The following information applies to the questions displayed below.] Tom Hruise was an entertainment executive who had a fatal accident on a film set. Tom's will directed his executor to distribute his cash and stock to his spouse, Kaffie, and the real estate to a church. The First Church of Methodology. The remainder of Tom's assets were to be placed in trust for three children. Tom's estate consisted of the following: Assets: Personal assets Cash and stock Intangible assets (film rights) Real estate Liabilities: Mortgage Other liabilities Gross estate Marital Deduction Charitable Deduction Debts Taxable Estate Adjusted taxable gifts Cumulative taxable transfers Tax on cumulative transfers Less taxes paid on prior gifts Tentative estate tax a. Tom made a taxable gift of $6.40 million in 2011. Compute the estate tax for Tom's estate. (Refer to Exhibit 25-1 and Exhibit 25-2.) Note: Enter your answers in dollars, not millions of dollars. Answer is not complete. $…
As to Principal I charge myself with: Assets subsequently discovered: Total charges I redit myself with: Estate principal Estate principal: Estate principal As to Income I charge myself with: I credit myself with: Balance as to income Balance as to income:
At the time of her death on September 4, Alicia held the following assets: Bonds of Emerald Tool Corporation Stock in Drab Corporation Insurance policy (face amount of $1,456,000) on the life of her brother, Mitch Traditional IRAs Cash surrender value. Fair Market Value The amount included in Alicia's gross estate for these items is $ $3,640,000 4,368,000 * 291,200 1,092,000 Alicia also held a lifetime income interest in a trust (fair market value of trust assets $5,500,000) created by her late spouse Bert. (The executor of Bert's estate had made a QTIP election.) In October, Alicia's estate received an interest payment of $15,000 ($7,500 accrued before September 4) paid by Emerald and a cash dividend of $10,550 from Drab. The Drab dividend was declared on August 19 and was payable to date of record shareholders on September 3. Although Mitch survives Alicia, she is the designated beneficiary of the insurance policy. The IRAs are distributed to Alicia's children.
vi.3
vi.3
Richard placed his portfolio of income-producing stock valued at $200,000 into an irrevocable trust. The trust provides that the trustee is to pay to Richard 7% of the initial value of the trust annually for a period of 12 years. After the 12-year term, the trustee is directed to pay the remaining assets in the trust to Richard's daughter. Which of the following are CORRECT statements regarding the income, gift, or estate tax implications of this trust arrangement? Richard will owe a gift tax based on the present value of the remainder interest given to his daughter. Taxation of the income earned by this trust will be affected by the grantor trust rules. If Richard dies during the 12-year term of the trust, the trust assets will be included in his gross estate. The right that Richard has retained in this trust is considered to be "qualified" for purposes of the Chapter 14 rules. A) II and IV B) I and III C) I, II, III, and IV D) I and IV
Carl made the following transfers during the current year. What are Carl’s taxable gifts for the current year? 1.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. 2.In consideration of their upcoming marriage, gave Maria a $90,000 convertible. 3.Purchased a $100,000 certificate of deposit listing title as “Carl, payable on proof of death to Maria.” 4.Established a joint checking account with his now-wife, Maria, in December of the current year with $30,000 of funds he inherited from his parents. In January of the following year, Maria withdrew $18,000 of the funds. 5.Purchased for $80,000 a paid-up insurance policy on his life (maturity value of $500,000). Carl designated Maria as the beneficiary. 6.Paid $23,400 to a college for his niece Mindy’s tuition and $11,000 for her room and board. Mindy is not Carl’s dependent. 7.Gave his aunt Betty $52,000 for her heart bypass…
Randy established a trust, reserving in himself the power to terminate the trust if he is not satisfied with its operation. After two years, the power to terminate the trust expires. Randy transferred commercial real estate into the trust and specified that the income be payable annually for the benefit of his adult daughter, Michelle. Randy died one year after creation of the trust instrument. One estate tax implication for Randy of this trust is that the trust property is A) included in his estate because a family member is receiving a benefit from the trust. B) not included in his estate because a transfer for the benefit of a minor is exempt from tax. C) included in Randy's estate because he still had the power to terminate the trust at his death. D) not included in his estate because the power to terminate the trust eventually expires.
The estate of Nancy Hanks reports the following information: What is the taxable estate value? $7,070,000. $7,100,000. $7,180,000. $7,420,000.
Donna Stober's estate has the following assets (all figure approximate fair value): Investments in stocks and bonds $1,552000 House 756,000 Cash 74,900 Investment land 60,800 Automobiles (three rare vehicles) 59,000 Other assets 108,000 The house, cash, and other assets are left to the decendent's spouse. The investment land is contributed to a charitable organization. The automobiles are to be given to the decendent's brother . The investments in stocks and bonds are to be put into a turst fund. The income generated by this trust will go to the decendent's spouse annually until all of the couple's children have reached the age of 25. At that time, the…
Jerry Tasch’s will has the following provisions: $150,000 in cash goes to Thomas Thorne. All shares of Coca-Cola go to Cindy Phillips. Residence goes to Kevin Simmons. All other estate assets are to be liquidated with the resulting cash going to the First Church of Freedom, Missouri. Prepare journal entries for the following transactions: Discovered the following assets (at fair value): Collected interest of $7,000. Paid funeral expenses of $20,000. Discovered debts of $40,000. Located an additional savings account of $12,000. Conveyed title to the residence to Kevin Simmons. Collected life insurance policy. Discovered additional debts of $60,000. Paid debts totaling $100,000. Conveyed cash of $150,000 to appropriate beneficiary. Sold the shares of Polaroid for $112,000. Paid administrative expenses of $10,000.