2053: PROBLEM 12 QUESTION 2 Ten years ago, D transferred Ds assets to a revocable trust under an instrument that provided that the trustee was to pay the income to D for Ds life, and at Ds death, to pay the corpus to Ds child C or Cs estate. When D died in the current year, the trust corpus had substantial value; the trustee charged a reasonable termination commission of $10,000 in connection with the distribution of the assets to C. (a) Does the $10,000 payment qualify as an estate tax deduction? (b) Is there an obstacle to its deductibility under 2053(a)? (c) What is the Congressional answer? QUESTION 7 When D died, D had only $50,000 in a bank account and no other assets. However, this is the same D we encountered in Question 2, above, and D had been receiving $300,000 income annually from the trust, the corpus of which had a value of $7,000,000 at Ds death. D was personally liable for obligations in the amount of $100,000 when D died. This is therefore a taxable estate. Could Congress properly take the position that the deduction for claims should not exceed $50,000, since that is all D had from which claims can be paid, and that it is of no estate tax significance if C pays $50,000 of Ds claims from Cs own separate property? What has Congress done about this? QUESTION 8 D, in the current year, owned a piece of residential rental property that was worth $100,000 at Ds death. As a result of a fire, which occurred one month after Ds death, the value of the property declined to only $25,000, which was also its value on the alternate valuation date. (a) If the estate pays death taxes on the basis of date of death value, may it claim both an income tax deduction (under 165) and an estate tax casualty loss deduction , (under 2054)? (b) If the estate elects the alternate valuation date, will a 2054 or a 165 deduction be allowed? 2055: PROBLEM 13 QUESTION 1 D left property to a trust generally qualified as a charitable remainder annuity trust as defined in 664(d)(1), with provision for suitable fixed annual payments to A for As life, and a remainder to charity described in 2055(a). However, in addition, D provided that A could invade corpus of the trust for As happiness anytime during As lifetime. A died three months after Ds death. (a) Assuming that A did not exercise As power, to what extent, if at all, will the next to last sentence of 2055(a) ensure a charitable deduction for Ds estate? (b) What are the estate tax consequences to As estate? (c) Now assume that A was given no power to invade, and that D placed all of the assets in Ds gross estate in trust. If the estate otherwise qualifies for a 2032 election, will the amount of the charitable deduction reflect the fact that A has died? QUESTION 3 By will, D creates a trust with income to University Law School for 20 years, remainder to child. (a) Will Ds estate be allowed a 2055 deduction? (b) Will Ds estate be allowed a 2055 deduction if, in lieu of annual income payments, D requires that $6,000 be paid annually to Law School from the trust, and the trust corpus at the time of creation is $100,000? (c) Will Ds estate be allowed a 2055 deduction if, in lieu of the annual income payments, D requires that 4% of the value of the corpus (determined annually) be paid annually to Law School from the trust? QUESTION 4 D decides to leave Ds personal residence to a qualified charity but annually to let Ds child C have the benefit of it for Cs life. (a) D devises the residence directly to C for life, remainder to charity. Does the value of the remainder interest qualify for a 2055 deduction? (b) D leaves the residence in trust, income to C for life, remainder to charity. Does the value of the remainder interest qualify for a 2055 deduction? (c) What is the result in part (a) if the residence was Ds summer home and at Cs death, the residence was to be sold, and the proceeds distributed equally to two different charities? QUESTION 5 Ds executor properly deeds a qualified conservation easement to charity on land included in Ds gross estate and takes a 2055(f) deduction. Ds executor elects on Ds federal estate tax return to exclude a portion of the value of the land subject to the easement under 2031(c). The land is not subject to any liability and the easement is not liable for its share of federal estate tax. (a) If the land is worth $500,000, the qualified conservation easement is worth $200,000, and Ds year of death is 2013, what are the consequences of the deduction and election in Ds estate? (b) Same as part (a), except the land is worth $1,000,000. (c) Would D have been better off taxwise in part (a) if D had deeded the easement during Ds life