Question
Comprehensive Problem 14-68 (LO 14-1, LO 14-2, LO 14-3, LO 14-4) Montgomery has decided to engage in wealth planning and has listed the value of
Comprehensive Problem 14-68 (LO 14-1, LO 14-2, LO 14-3, LO 14-4)
Montgomery has decided to engage in wealth planning and has listed the value of his assets below. The life insurance has a cash surrender value of $120,000, and the proceeds are payable to Montgomerys estate. The trust is an irrevocable trust created by Montgomerys brother 10 years ago and contains assets currently valued at $800,000. The income from the trust is payable to Montgomerys faithful butler, Walen, for his life, and the remainder is payable to Montgomery or his estate. Walen is currently 37 years old, and the 7520 interest rate is currently 5.4 percent. Montgomery is unmarried and plans to leave all his assets to his surviving relatives. (Refer to Exhibit 25-1 , Exhibit 25-2 and Exhibit 25-4.)
| Adjusted | |||||
| Property | Value | Basis | |||
| Auto | $ | 20,000 | $ | 55,000 | |
| Personal effects | $ | 75,000 | $ | 110,000 | |
| Checking and savings accounts | $ | 250,000 | $ | 250,000 | |
| Investments | $ | 2,500,000 | $ | 770,000 | |
| Residence | $ | 1,400,000 | $ | 980,000 | |
| Life insurance proceeds | $ | 1,000,000 | $ | 50,000 | |
| Real estate investments | $ | 5,125,000 | $ | 2,800,000 | |
| Trust | $ | 800,000 | $ | 80,000 | |
| a. Calculate the amount of the estate tax due (if any), assuming Montgomery dies this year and has never made any taxable gifts. b. Calculate the amount of the estate tax due (if any), assuming Montgomery dies this year and made one taxable gift in 2006. The taxable gift was $1 million, and Montgomery used his applicable credit to avoid paying any gift tax. c. Calculate the amount of the estate tax due (if any), assuming Montgomery dies this year and made one taxable gift in 2006. The taxable gift was $5 million, and Montgomery used his unified credit to avoid paying any gift tax. Montgomery plans to bequeath his investments to charity and leave his remaining assets to his surviving relatives. SO FAR EVERY SOLUTION I HAVE FOUND IS COMPLETELY WRONG.
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Auditing Concepts And Methods A Guide To Current Auditing Theory And Practice
Authors: Mcgraw-Hill
5th Edition
0070099995, 978-0070099999
