Luther, 72, is a lifelong bachelor who has been very successful in his business and Communication Skills investment endeavors. He realizes that he should begin to do some tax planning for his death. Although he intends to leave the bulk of his $200,000,000 estate to the Northern State Technical University School of Accounting, he does have a few nieces and nephews for whom he would like to provide (although not too lavishly). Listed here is a selection of assets he is thinking of giving to his nephews and nieces:1.

Consider each of the following questions from Luther’s point of view (what is best from the standpoint of his tax situation). Explain.

a. Which of these properties would be best to give away to his favorite nephew?

Why?

b. Which of these properties would be the worst to give away? Why?

c. Which property(ies) should Luther definitely retain? Why?

d. Which property(ies) should Luther consider selling? Why?

2.

Luther comes to your accounting firm for advice. Write a memorandum explaining your recommendations for optimizing Luther’s tax situation in regard to assets listed.

Communication Skills

Transcribed Image Text:

Asset Keating S&L stock Impressionist painting Land held as an investment Limited partnership interest Rental property General Motors stock Fair Market Value Basis $ 10,000 $ 200,000 -0- 1,500,000 Suspended Loss 5,000,000 2,000,000 100,000 400,000 $1,300,000 4,000,000 1,000,000 2,500,000 2,000,000 1,000,000