A deceased client's son walks into your office. His father's life was insured for $10 million and he had $10million in other assets in his estate at the time of death. Assuming the client had used none of his unifiedcredit, had no deductions, and left his entire estate to his son, what should the client's estate tax liability be?The client had purchased the policy many years ago and has been paying the premiums himself.What facts would have to change in order for the $10 million insurance proceeds to not be included in thefather's estate? For example, what specific incidents of ownership would the son need to have in his father'spolicy?

The government imposes an estate tax, often known as inheritance tax or death tax, on the value of a…

Answered: A deceased client's son walks into your…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Rahul
A tax payer is treating real property used solely for business purposes for new real property to be used in his business. The real property originally cost $35,000 and he has taken $18,000 dollars in depreciation. The old real property is currently worth $20,000 dollars and the new real property the taxpayer wants in exchange is only worth $16,500.The other party agrees to get the taxpayer $3500 in addition to the new real property. What is the gain or loss recognized by the taxpayer on this transaction?
1. You are a Tax Consultant for an Accounting firm. Your client has emailed you with a question. She loaned $20,000 to a co-worker to begin a new business several years ago. If her co-worker declares bankruptcy on August 15 of the current year, is Amy allowed to deduct the bad debt loss this year? Additionally, she wants to know if she can deduct the loss, what is the character of the loss?
Rahul
1. Martha has a net capital loss of $17,000 and other ordinary taxable income of $45,000 for the current year. What is the amount of Martha's capital loss carryforward? a.$17,000 b.$0 c.$14,000 d.$10,000 e.None of these choices are correct. 2. Jerry bought his home 15 years ago for $60,000. Three years ago, Jerry married Debbie and she moved into the same house and has lived there since. If they sell Jerry's house in the current year for $340,000, what is their taxable gain on a joint tax return? a.$0 b.$30,000 c.$155,000 d.$280,000 3. Which of the following is a capital asset? a.A literary work held by the author b.A taxpayer's principle residence c.Real estate held by a developer d.A truck used in a taxpayer's business e.None of these choices are correct.
Your client has made previous lifetime gifts that have fully exhausted his applicable credit amount. He has asked you to advise him about the tax consequences of transferring his closely held business, valued at $350,000, to his daughter in exchange for a lump sum payment of $300,000. You should inform him that the most important tax implication of this intrafamily business transfer is that A) he will be making a taxable gift of $50,000, because the value of the transferred business exceeds the lump sum payment of $300,000. B) he will be making a taxable gift of $350,000, because the Chapter 14 rules require his retained interest to be valued at zero. C) he will have to include $50,000 minus one annual exclusion in adjusted taxable gifts in his estate tax calculation as an adjusted taxable gift. D) none of the above.
Explain why the loss resulting from the sale of a computer in the following three situations is treated differently for income tax purposes:a. Monica sells her personal computer at a loss of $1,300. None of the loss is deductible.b. Omar sells a computer used in his carpeting business at a loss of $4,300. The loss is fully deductible.c. Jerry sells his computer at a loss of $3,800. Jerry used the computer to keep track of his investment portfolio. Only $3,000 of the loss is deductible.
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In 2006, Douglas purchased an office building for $500,000 to be used in his business. He sells the building in the current tax year. Explain whether his recognized gain or loss for regular income tax purposes will be different from his recognized gain or loss for AMT purposes.
LO.8 During 2022, Chester (a married taxpayer filing a joint return) had the following transactions involving capital assets: Gain on the sale of an arrowhead collection (acquired as an investment at different times but all pieces have been held for more than 1 year) Loss on the sale of IBM Corporation stock (purchased 11 months ago as an investment) Gain on the sale of a city lot (acquired 5 years ago as an investment) 4 How much income tax results from these capital asset transactions if: a. Chester has taxable income of $378,400? b. Chester has taxable income of $74,125? $ 6,000 (3,500) 2,000
Yancy's personal residence is condemned as part of an urban renewal project. His adjusted basis for the residence is $572,600. He receives condemnation proceeds of $543,970 and invests the proceeds in stocks and bonds. If an amount is zero, enter "0". a. Calculate Yancy's realized and recognized gain or loss. Yancy's realized loss is $________________, and Yancy's recognized loss is $_________________. b. If the condemnation proceeds are $598,367, what are Yancy's realized and recognized gain or loss? Yancy's realized gain is $_______________, and Yancy's recognized gain is $_______________. c. Assume the house is rental property. Yancy's adjusted basis is $572,600 and he receives condemnation proceeds of $543,970 and invests the proceeds in stock. What are Yancy's realized and recognized gain or loss? Yancy's realized loss is $______________, and Yancy's recognized loss is $________________

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