Chapter 18 in Corporations, Partnerships, Estates & Trusts Problem 1 on pages 18-46

The Federal Gift and Estate Taxes Tax Return Problems

• < > James A. and Ella R. Polk, ages 70 and 65, are retired physicians who live at 13319 Taylorcrest Street, Houston, Texas 77079. Their three adult children (Benjamin Polk, Michael Polk, and Olivia Turner) are mature and responsible persons. The Polks have heard that the Obama administration has proposed lowering the Federal gift tax exclusion from $5.25 million to $3 million. Although this change may not occur, the Polks feel they should take advantage of the more generous exclusion available under existing law. Thus, in 2013, the Polks make transfers of many of their high value investments. These and other gifts made during 2013 are summarized below.

  Doinor

  Asset Transfer

  James

  Ella

  Condominium located in Conroe (TX) acquired in 1999, cost $1.2 million, to Benjamin, Michael, and Olivia as equal tenants in common.

  $1,800,000

  $1,800,000

  Office building, located in Round Rock (TX) built in 2001, cost $1.8 million, to Benjamin, Michael, and Olivia as equal tenants in common.

  2,200,000

  2,200,000

  Vacation ranch in Bandera (TX) inherited by James from his father in 1996, value then $900,000, to Benjamin, Michael, and Olivia as equal joint tenants with right of survivorship.

  2,400,000