103ut ofYour client just died. He owned a life insurance policy on his life that is payable to his daughter. The relevantinformation about this policy is as follows:Face Value $1,000,000Cash surrender value $ 50,000What is included in his estate?a. $20,000 ($1,000,000/$50,000)b. $525,000 (($1,000,000+50,000)/2)O c. Nothingd. $50,000e. $1,000,000Nex

Generally, the face value of a life insurance policy owned by the deceased is not included in their…

Answered: Your client just died. He owned a life…

SWFT Corp Partner Estates Trusts

42nd Edition

ISBN:9780357161548

Author:Raabe

Publisher:Raabe

Chapter18: The Federal Gift And Estate Taxes

Section: Chapter Questions

Problem 29CE

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Question #59 of 85 Question ID: 1251855 Your client is terminally ill. Her potential gross estate, valued at $12.9 million, includes the following assets: A life insurance policy on her life, with a death benefit of $500,000; her deceased husband is the named beneficiary A general power of appointment (valued at $500,000) over the assets of a trust established by her husband; her children are the designated remaindermen of the trust A $500,000 retained life estate in the family residence Your client also expects to receive a $500,000 bequest within the next four months from her deceased sister's estate; the client's children are the contingent beneficiaries of the bequest. Your client would like to transfer a portion of her estate to her two children while she is alive to reduce her potential estate tax liability to the greatest extent possible. Which one of the following exclusion techniques would be the most appropriate to reduce the value of your client's potential gross…
34. Two years ago, your client, Tim, purchased a $100,000 whole life insurance policy on the life of his wife. He has made all of the premium payments from his separate checking account. The beneficiary of the policy is their only child. If Tim dies within the next few months, what is the value of the policy that will be included in his gross estate? A) The cash surrender value of the policy because he will have purchased the policy within three years of his death B) The full death benefit value of the policy because the proceeds are paid to a family member C) The face value of the policy because he paid the premiums from his separate checking account D) The replacement value of the policy because he will have an incident of ownership at death
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H6. Sarah is the beneficiary of her mother’s $100,000 life insurance policy. When her mother dies, Sarah is relying on the entire death benefit to pay expenses related to her mother’s funeral and end-of-life care. However, unbeknown to Sarah, her mother had outstanding policy loans totaling $60,000. How much can Sarah expect to receive in death benefits from her mother’s policy? a. $100,000 b. $60,000 c. $40,000 d. $20,000
T 2.
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LO.2 Alfred owned a term life insurance policy at the time he was diagnosed with a terminal illness. After paying $18,300 in premiums, he sold the policy to a company that is authorized by the state of South Carolina to purchase such policies. The company paid Alfred $125,000. When Alfred died 18 months later, the company collected the face amount of the policy, $150,000. As a result of the sale of the policy, how much is Alfred required to include in his gross income?
Harry's wife Lila passes away in January of the current year. Fortunately, Lila had a $1 million life insurance policy. Harry elects to receive all $1 million in the current year and spends $200,000 of it on a luxury around-the-world trip with his new girlfriend. Harry's gross income from the life insurance is: $0 $200,000 $800,000 $1,000,000
Ellie purchases an insurance policy on her life and names her brother, Jason, as the beneficiary. Ellie pays 32,000 in premiums for the policy during her life. When she dies, Jason collects the insurance proceeds of 500,000. As a result, how much gross income does Jason report?
LO2 Fatima inherits a rental property with a fair market value of 90,000 from her aunt on April 30. On May 15, the executor of the estate sends her a check for 7,000. A letter accompanying the check states that the 7,000 comes from the rent received on the property since her aunts death. Fatima receives 6,600 in rent on the property during the remainder of the year and pays allow able expenses of 4,200 on the property. How much gross income does Fatima have from these transactions?
Minnie owns a qualified annuity that cost 78,000. The annuity is to pay Minnie 650 per month for life after she reaches age 65. Minnie turns 65 on September 28, 2019, and receives her first payment on November 1, 2019. a. How much gross income does Minnie have from the annuity payments she receives in 2019? b. Shortly after receiving her payment on October 1, 2034, Minnie is killed in an automobile accident. How does the executor of Minnies estate account for the annuity on her return for the year 2034? c. Assume that the accident does not occur until November 1, 2043. How does the executor of Minnies estate account for the annuity on her 2043 return?

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Your client just died. He owned a life insurance policy on his life that is payable to his daughter. The relevant information about this policy is as follows: Face Value $1,000,000 Cash surrender value $ 50,000 What is included in his estate?