Problem 25-50 (LO 25-3) (Algo)[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 todistribute his cash and stock to his spouse, Kaffie, and the real estate to a church, The First Church of Methodology. Theremainder of Tom's assets were to be placed in trust for three children. Tom's estate consisted of the following:Assets:Personal assetsCash and stockIntangible assets (film rights)Real estateLiabilities:MortgageOther liabilities$ 1,210,00025,000,00076,500,00016,000,000$ 118,710,000$ 4,200,0005,100,000$ 9,300,000Problem 25-50 Part a (Algo)a. Tom made a taxable gift of $6.10 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.

Gross Estate refers to the value of the property claimed by the individual which is the sum that…

Answered: Problem 25-50 (LO 25-3) (Algo) [The…

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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Mark's will contains the following dispositive provisions. $10,000 to the American Cancer Society. $5,000 to the Pastor of my church. $4,000 to my cousin Vinny who has extensive medical issues. $4,000 to Grave Robbers, a nonprofit cemetery association. $3,000 to the First Presbyterian Church in London, England. What is the amount of the charitable deduction available to Mark's estate? Group of answer choices $10,000. $13,000. $17,000. $21,000. $26,000.
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…
Required information [The following information applies to the questions displayed below.] Calvin reviewed his canceled checks and receipts this year (2023) for charitable contributions, which included an antique painting and IBM stock. He has owned the IBM stock and the painting since 2005. Donee Hobbs Medical Center State Museum A needy family United Way Item IBM stock Antique painting Food and clothes Cash Cost $ 7,200 6,100 620 30,000 Calculate Calvin's charitable contribution deduction and carryover (if any) under the following circumstances. Note: Leave no answer blank. Enter zero if applicable. Charitable contribution deduction Carryover FMV $ 44,000 3,660 370 30,000 d. Calvin's AGI is $210,000 and Hobbs is a private nonoperating foundation. Answer is complete but not entirely correct. $ 33,660 X 0
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.
In 2001, Heather created a trust with income to her partner Gina for life, remainder to her daughter, Sonia, if living, and if Sonia is not living then to Heather if Heather is living, and if Heather is not living, then to granddaughter Beth or Beth's estate. In 2011, while all parties remain alive, Heather transfers her contingent interest to Beth, relinquishing all rights and interest in the property. In 2013, Heather dies, predeceasing Gina, Sonia, and Beth. What are Heather's estate tax consequences, if any? No Inclusion Inclusion in Grantor's gross estate pursuant to 2033 Inclusion in Grantor's gross estate pursuant to 2035 Inclusion in Grantor's gross estate pursuant to 2036 Inclusion in Grantor's gross estate pursuant to 2037 Inclusion in Grantor's gross estate pursuant to 2038
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.
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…
A 55 year old executive is considering retiring and asks your opinion whether it would be better for him to gift $500,000 ( in cash) to his only daughter or invest the $500,000 and bequeath the $500,000 plus earnings to his daughter in his will. The executive is healthy and expects to live at least another 20 years. His entire estate is expected to be in excess of the exclusion amount. What advice would you give the executive? Explain your reasoning including any assumptions as to taxes, earnings rates on investments, spending patterns, potential changes in tax law, and so on. Would your answer be different if he wanted to give stock which has significantly appreciated since he purchased it? In the alternative, how might the annual gift tax exclusion be used to transfer value to his daughter?
Andy, 68, has a gross estate currently valued at $2,500,000 that consists primarily of highly appreciated growth securities. Within the last six months, Andy transferred $500,000 worth of these securities to his wife, Harriet. His cost in these securities was $200,000. Harriet recently died. The fair market value of the transferred securities at the time of her death was $500,000. The securities passed to Andy under the terms of Harriet's will. Which one of the following is an income tax implication of the transfer of stock? A) Andy must recognize $300,000 in capital gain on the stock as of Harriet's death. B) If Andy sells the stock he received from Harriet immediately after her death, his gain, if any, will be deemed to be short-term capital gain. C) Andy's basis in the stock is $200,000. D) Andy's basis in the stock is $500,000.
1. Karen received a stock portfolio upon the death of her grandmother. The stock originally cost her grandmother $32,000, but was worth $250,000 when she died. What is Karen's tax basis in the stock portfolio? Explain. In your response, please make sure to take all of the facts above into consideration. You can refer back to the text, lecture videos, and the IRS website. Please make sure to support whatever conclusion you decide to present.
The provisions of a will currently undergoing probate are: “One thousand shares of Wal-Mart Stores stock to my son; $10,000 in cash from my Astoria Savings Bank account to my brother; $5,000 in cash to my daughter; and any remaining property divided equally between my son and daughter.” Assuming at the time of death the estate included 1,400 shares of Wal-Mart Stores stock and $25,000 cash in the savings account, what would the son have received from the settlement of the estate? What is the remaining principal to be divided equally between the son and the daughter? c..Assuming at the time of death the estate included 1,000 shares of Wal-Mart Stores stock and $6,000 cash in the savings account, what would the brother have received from the settlement of the estate?

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