y Carol is a prohibited interest for purposes of the family attribution waiver.
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Five years ago, Carol and her mom each owned 50% of the stock in ABC Corporation. At that time, ABC redeemed all of Carol’s stock. For the redemption year, Carol filed the agreement required of the family attribution waiver and reported the transaction as a complete termination redemption (i.e. sale and exchange). In the current year, Carol’s mom passed away and willed her entire interest in the ABC Corporation stock to Carol. The inheritance of ABC Corporation stock by Carol is a prohibited interest for purposes of the family attribution waiver.
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- Auntie sold some stock she purchased several years ago for $10,000 to Niece for $6,000. I. If this is Auntie's only stock transaction, she can deduct only $3,000 of the loss. II. If Niece sells the stock for $10,000, her taxable gain is $4,000. What is correct?Bret died and was survived by his wife, Anne, and two adult children. Bret's will provided for the maximum estate tax applicable exclusion amount for the year of death to be placed into a family bypass trust, in which Anne and the children were named as income beneficiaries, with the children to receive equal shares of the trust assets upon Anne's death. The will provided that the remainder of Bret's estate was to be placed in a power of appointment trust. Bret did not make any lifetime taxable gifts. Assume that no federal estate tax deductions other than the marital deduction were taken. Which of the following are CORRECT statements about the federal estate tax implications of the estate planning techniques contained in Bret's will? Bret's taxable estate will be zero, but his tax base will be the maximum estate tax applicable exclusion amount. Anne's interest in the family bypass trust is considered to be a terminable interest; thus, assets placed in this trust will not be entitled…Gus (age 84) and Belle (age 18) are married early in the year. Late in the same year, Belle confronts Gus about his failure to transfer to her the considerable amount of property he previously promised. Gus reassures Belle that she will receive the property when he dies. Because the transfer occurs at death, the estate tax martial deduction will avoid any Federal transfer taxes at the time. Comment on the issues involved and any misconceptions Gus may have.
- Matthew and Gabriella form Epsilon Corporation. Matthew transfers property (basis of $50,000 and fair market value of $40,000) while Gabriella transfers land (basis of $25,000 and fair market value of $30,000) and $10,000 in cash. Each receives 50% of Epsilon Corporation's stock, which is worth a total of $80,000. As a result of these transfers: None of the above Matthew has no recognized loss, but Gabriella a recognized gain of $10,000. Epsilon Corporation will have a basis in the land of $30,000. Neither Matthew nor Gabriella has any recognized gain or loss. Matthew has a recognized loss of $10,000, and Gabriella has a recognized gain of $15,000.Giovanni established an irrevocable life insurance trust in 2014 and funded it with a $1 million face value policy on his life. After his death, income of the trust is distributed at the discretion of the corporate trustee to Giovanni's wife and children. The trust is to terminate 25 years after Giovanni's death, when trust assets are to be distributed to Giovanni's grandchildren. Which one of the following is a correct statement about the application of the generation-skipping transfer tax (GSTT) to this trust? A)The GSTT will apply when a taxable termination occurs. B)The GSTT cannot apply to this trust since no skip parties were in existence when it was established. C)The GSTT will never apply to this trust because Giovanni did not assign any of his GSTT exemption. D)The GSTT will not be applicable to this trust since it violates the rule against perpetuities.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…
- Harold and Maude were married and lived in a common-law state. Maude died in 2018 with a taxable estate of $25.80 million and left it all to Harold. Maude's executor filed a timely estate tax return claiming the marital deduction for the property left to Harold including a valid portability election. Harold died this year, leaving the entire $25.80 million to their three children. Calculate how much estate tax is due from Harold's estate under the following two alternatives: A. Assume that neither Harold nor Maude had made any taxable gifts prior to this year. B. Assume that Harold and Maude each made a $1 million taxable gift in 2011 and offset the gift tax at that time with the applicable credit.Tavon dies and is survived by his wife, Marge. Under Tavon’s will, all of his otherwise uncommitted assets pass to Marge. For each of the following property interests, determine the marital deduction allowed to Tavon’s estate. 4. Insurance policy on Tavon’s life (maturity value of $500,000) owned by Tavon with Marge as the designated beneficiary. 5. Distribution from a qualified pension plan of $1,600,000 (Tavon matched his employer’s contribution of $500,000) with Marge as the designated beneficiary.Bill and Guilda each own 50 percent of the stock of Radiata Corporation, an S corporation. Guilda's basis in her stock is $21,000. On May 26, 2019, Bill sells his stock, with a basis of $40,000, to Loraine for $50,000. For the 2019 tax year, Radiata Corporation has a loss of $104,000. Round your final answers to the nearest dollar. Use a 365-day year in your computations. a. Calculate the amount of the corporation's loss that may be deducted by Bill on his 2019 tax return.$ b. Calculate the amount of the corporation's loss that may be deducted by Guilda on her 2019 tax return.$ c. Calculate the amount of the corporation's loss that may be deducted by Loraine on her 2019 tax return.
- Stooge dies on March 2 of the current year. At the time of his death he owned owning the following securities which had the value indicated on the date of his death: A. Moe Inc $10Million B. Larry Inc $15Million C. Curley Inc $20Million. On April 2 when Moe Inc is worth $11Million it is sold. On May 19 when Larry Inc is worth $2Million it is distributed to the beneficiaries of the estate. On December 2 Curley Inc is worth $24Million. On 12/31 when Curley is worth $27Million the estate is closed and the stock is distributed to the beneficiaries. 1. What are the two requirements for the executor of the Stooge estate to be able to elect the alternate valuation date for the assets of the estate? 2. Indicate what each security would be valued at in the tax return.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.At the beginning of the current year, Laura owns 100% of the stock of ABC Corporation. On 7/1/20, Lisa sold her stock to Mark. At the beginning of 2020, ABC Corporation had accumulated E&P of $400,000 and its current E&P for 2020 is $400,000 (prior to any distributions). ABC distributed $500,000 cash on February 15th to Laura and distributed another $500,000 cash to Mark on November 1st. How much dividend income does Mark recognize from ABC this year?