21. Leslie died on October 31, 2011. Prior to 2009, Lesliehad never made any gifts, but in 2010 she made some transfers.Specifically, on January 10, 2010, Leslie gave her vacation beachhouse to her five children as tenants in common. The fair marketvalue of the vacation beach house on the date of the transfer was$50,000. The fair market value of the vacation beach house at thedate of Leslie’s death was $100,000. When Leslie died on October31, 2011, she owned a vacant lot jointly with her sister, Melissa,as joint tenants with right of survivorship. Leslie and her sistereach contributed $10,000 toward the $20,000 purchase price. Thebasis of the property did not change subsequent to the purchase,and at Leslie’s death, the fair market value of the property was$60,000. There is $90,000 of life insurance on the life of Leslie,and her estate is named as the beneficiary. (Assume all assets havethe same value on the alternate valuation date as on the date ofdeath). What is the amount of Leslie’s gross estate for federalestate tax purposes?
22. Under Carl’s will, Carl created a testamentary trust to befunded with $700,000 worth of assets. All of the income of thetrust is payable to Carl’s child, Jane, for her life, andthereafter, the remaining assets of the trust will pass to ThePublic Charity. Jane is serving as the trustee. In addition, thetrustee has the discretion to distribute all or such portion of theprincipal as the trustee shall determine for Jane’s heath, support,and maintenance. Jane’s father, Carl, died during the currenttaxable year with a gross estate of $5,350,000. (Carl’s spouse diedin 1985 and no estate tax return was due at her death). Which ofthe following statements is accurate with respect to the federalestate tax?
23. At the time of his death, Nick owned the followingproperty:
· Land held by Nick and his sister Ellen, as joint tenants withright of survivorship. The fair market value of the land on thedate of Nick’s death was $600,000, and the land was purchased byNick for himself and his sister 20 years before his death for$150,000.
· Land held by Nick and Amy as tenants by the entirety. The fairmarket value of the land on the date of Nick’s death was $800,000,and the land was purchased by Amy for Nick and Amy five yearsbefore Nick’s death for $450,000.
· A one-half undivided interest in land held with Lance as tenantin common. The fair market value of the land on the date of Nick’sdeath was $400,000, and the land was purchased by Lance for Nickand Lance four years before Nick’s death for $300,000.
· City of Dayton bonds worth $500,000 purchased by Nick five yearsbefore his death, and titled in Nick’s sole name.
What amount is includible in Nick’s gross estate assuming alternatevaluation is not available to Nick’s estate?
24. If an election is available and is made to use alternatevaluation for federal estate tax purposes, then if a parcel of realestate owned by the decedent is sold within six months after thedecedent’s death, the parcel of real estate is valued for federalestate tax purposes as of which date?
25. Beth, who died in January 2012, was survived by her husband,Ben. Beth’s federal gross estate was equal to $6,000,000 on thedate of her death. When Beth died, Beth’s assets included anundeveloped parcel of real estate in Jacksonville in the names of“Beth and Ben, as joint tenants with right of survivorship.” Thefair market value of the land on the date of Beth’s death was$750,000. Ben provided all of the consideration for the purchase ofthe land, paying $200,000 for it in 2009. Alternate valuation isnot available to Beth’s estate as all assets owned by Beth willpass, either under Beth’s last will and testament or by operationof law, to Ben and hence, no estate tax will be due because of themarital deduction. What is Ben’s basis in the real estate afterBeth’s death?
26. Assume for 2011 that Don made one transfer involving hisgranddaughter as follows: Don opened a joint checking account withhis granddaughter, with right of survivorship, for her collegeexpenses. Don made an initial deposit of $100,000. During 20011,granddaughter wrote checks on the account to the school for tuitionof $15,000 and living expenses of $20,000. What is the amount ofthe taxable gift for federal gift tax purposes?
27. Oliver gave his wife $5,100,000 worth of publicly traded stockin August 2011, outright. Oliver’s basis in the stock was $50,000.What is the amount of the taxable gift for federal gift taxpurposes? (Oliver made no other gifts to anyone in 2011).
28. For 2012, what is the amount of the maximum gift tax annualexclusion per donor from the value of a gift of a future interestmade to any one donee?
29. Facts for Questions 29 and 30. Mr. Grey died on January 1,2011. Mr. Grey made no gifts during his life. Under his will, Mr.Grey devised all of his probate assets to his wife. Mr. Grey ownedthe following assets, probate and nonprobate, at the date of hisdeath:
Asset 1. Home in Mr. Grey’s and Mrs. Grey’s (his surviving spouse)names as tenants by the entireties that was purchased in 2005. Thehome was had a fair market value of $2,000,000 both at the date ofMr. Grey’s death and six months after the Mr. Grey’sdeath.
Asset 2. Publicly traded stocks and bonds solely in , Mr. Grey’sname that had a fair market value of $3,000,000 on the date of Mr.Grey’s death and a fair market value of $2,000,000 six months afterMr. Grey’s death.
Asset 3. Undeveloped real estate in Mr. Grey’s name and the name ofhis daughter, Sue Smith, jointly with right of survivorship thatMr. Grey purchased in 2005 for $100,000. The property had a fairmarket value of $2,500,000 at the date of Mr. Grey’s death and afair market value of $1,000,000 x months after the date of Mr.Grey’s death.
Asset 4. A condominium in the decedent’s name alone purchased in2001 and used as a vacation home that had a fair market value of$500,000 on the date of Mr. Grey’s death. The condominium was soldby the personal representative of the decedent’s estate for$250,000 four months after Mr. Grey’s death.
Based on the facts for questions 29 and 30, which of the followingoptions are available to Mr. Grey’s estate for valuation of theassets includible in the gross estate?
30. Facts for Questions 29 and 30. Mr. Grey died on January 1,2011. Mr. Grey made no gifts during his life. Under his will, Mr.Grey devised all of his probate assets to his wife. Mr. Grey ownedthe following assets, probate and nonprobate, at the date of hisdeath:
Asset 1. Home in Mr. Grey’s and Mrs. Grey’s (his surviving spouse)names as tenants by the entireties that was purchased in 2005. Thehome was had a fair market value of $2,000,000 both at the date ofMr. Grey’s death and six months after the Mr. Grey’sdeath.
Asset 2. Publicly traded stocks and bonds solely in , Mr. Grey’sname that had a fair market value of $3,000,000 on the date of Mr.Grey’s death and a fair market value of $2,000,000 six months afterMr. Grey’s death.
Asset 3. Undeveloped real estate in Mr. Grey’s name and the name ofhis daughter, Sue Smith, jointly with right of survivorship thatMr. Grey purchased in 2005 for $100,000. The property had a fairmarket value of $2,500,000 at the date of Mr. Grey’s death and afair market value of $1,000,000 six months after the date of Mr.Grey’s death.
Asset 4. A condominium in the decedent’s name alone purchased in2001 and used as a vacation home that had a fair market value of$500,000 on the date of Mr. Grey’s death. The condominium was soldby the personal representative of the decedent’s estate for$250,000 four months after Mr. Grey’s death.
Based upon the facts presented in the fact pattern for questions 32and 33, what is the amount of Mr. Grey’s gross estate for federalestate tax purposes?
31. Jennie purchased 50 percent of the shares of SJ Corporation, acalendar year S corporation, for $7,000. She also guaranteed acorporate loan of $6,000. For 2011, SJ Corporation had an operatingloss of $22,000. What is the amount of SJ Corporation’s loss thatJennie may deduct on her individual income tax return for 2011?
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