34. LO.3 In each of the following independent situations, indicate whether the alter- nate valuation date can be elected. Explain why or why not. All deaths occur in 2015. Value of Gross Estate Estate Tax Liability Date of Six Months Date of Six Months Decedent Death Later Death Later Jayden $6,000,000 $5,900,000 $240,000 $239,000 Isabella 6,100,000 6,000,000 265,000 260,000 Liam 6,100,000 6,000,000 200,000 210,000 Lily 6,500,000 6,400,000 205,000 204,000
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 is not Carl’s dependent.
• Gave his aunt $52,000 for her heart bypass operation. The aunt is not Carl’s dependent.
What are Carl’s taxable gifts for the current year?
36)In May, 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 immediately, and the balance is due one year later. The parties are divorced in July. Dudley dies in December, and his estate pays Eva the remaining $3.5 million in May. Discuss the tax ramifications of these transactions to the parties involved
37) While vacationing in Florida in November, Sally was seriously injured in an automobile accident (she 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 expenses flying to Florida, retrieving the body, and returning it to Frankfort, Kentucky, for burial.
b. Early in the year, Sally had pledged $50,000 to the building fund of her church. Bruce paid this pledge from the assets of the estate.
c. Prior to her death, Sally had promised to give her nephew, Gary, $20,000 when he passed the bar exam. Gary passed the exam late in the year, and Bruce kept Sally’s promise by paying him $20,000 from estate assets.
d. At the scene of the accident and before the ambulance arrived, someone took Sally’s jewelry (i.e., Rolex watch and wedding ring) and money. The property (valued at $33,000) was not insured and was never recovered.
e. As a result of the accident, Sally’s auto was totally destroyed. The auto had a basis of $52,000 and a fair market value of $28,000. In January, the insurance company pays Sally’s estate $27,000.
38) 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 owned by Roy, Marge, and Amber (Marge’s sister) as equal tenants in common. Amber furnished the original purchase price.
b. Residence of Roy and Marge worth $900,000 owned by them as tenants by the entirety with right of survivorship. Roy provided the original purchase price.
c. Insurance policy on Roy’s life (maturity value of $1 million) owned by Marge and payable to her as the beneficiary.
d. Insurance policy on Roy’s life (maturity value of $500,000) owned by Roy with Marge as the designated beneficiary.
e. Distribution from a qualified pension plan of $1.6 million (Roy matched his employer’s contribution of $500,000) with Marge as the designated beneficiary
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