Lifetime gifting strategy. Camila Ortiz has accumulated substantial wealth and plans to gift some of her wealth to her son Diego. She is considering two assets: a beach house, which cost $300,000 twenty years ago and now has a fair market value of $750,000, and shares in three mutual funds, which cost her $550,000 five years ago and now have a fair market value of $750,000.

Prepare a memo advising Camila which property to give to Diego. In your memo, consider two scenarios: one where Diego sells the property and one where he does not.

LO4, 5 9. Calculating federal transfer tax on estate.

Ronald Knight died in 2018, leaving an estate of

$26 million. Ronald’s wife, Aurora, died in 2015.

In 2013, Ronald gave his son Jamie, property that resulted in a taxable gift of $3 million and upon which Ronald paid $885,000 in transfer taxes. Ronald had made no other taxable gifts during his life. His will provided a charitable bequest of $1 million to his church. Determine the federal transfer tax on Ronald’s estate. P-89