Federal Taxation 655

5-1 Discussion

Gift Taxes

Ann, age 61 and Bob , age 62, have a large number of investments in common stock of publicly traded corporations, some municipal bonds, and a money market cash account worth several millions dollars. In addition, they own a ranch in texas that may be worth $100,000,000. They have a large famity consisting of three sons, four daughters, and fifteen grandchildren.

What are some alternatives that Ann and Bob could consider in order to reduce their taxable estate, assuming that the tax law is not yet abolished or amended by Congress befor the two taxpayers die? What are the consequences if Ann and Bob decide to gift investments worth $ 1,000,000 to each of their children and grandchildren? What are the consequences of leaving a large estate that will be divided among their children and grandchildren?

When responding to your peers' posts, explain wheather you agree and disagree with the other student's recommendation. The reason you agree or disagree can be tax or non- tax related. Provider an opinion about the tax consequences and related issues of your peer's proposal.