Your single client Sam has three assets: - Cash (Non Interest Bearing) of $3,000,000 - Land that is worth $2,000,000 today and appreciates at 6% per year - Stock in a family corporation that is worth $8,000,000 today and grows 12% per year

Sam has no charitable intention and wants to leave everything to his daughter Jennifer, who is the CEO of his family corporation. Sam is comfortable living off of his cash for the remainder of his life. He has come to you and asked if it there would be any advantage to making a lifetime gift of the land and the corporation this year to Jennifer, rather than holding on to them and having them transfer to her from his estate.

Based on his heath and family history, your calculations will assume that Sam will live another 12 years.

Planning Scenario One – Gift the land and company to Jennifer now.

Planning Scenario Two – Hold on to the land and company stock and transfer them to Jennifer at death.

Question – Calculate the tax impact of the two scenarios and quantify the tax difference between them