Form 706 Estate Tax Return

Daisy Johnson, age 78, died in an automobile accident on June 6, 2022. At the time of her death, Ms. Johnson resided at 1234 Main Street, Oakly, Michigan 48123. She was predeceased by her husband, Joseph J. Johnson, who died in 2002. Daisy is survived by her two adult children, Joey J. Johnson and Jenny Johnson-Schmidt. Daisys estate is summarized as follows:

1. Josephs will established a marital deduction trust that was funded with $11 million in assets. Under the terms of the trust, Daisy received a life estate with the remainder passing to their children (i.e. Joey and Jenny) in equal shares. To obtain the marital deduction for his estate, Joseph s executor made a QTIP election on the 2002 Form 706 that was filed. On June 6, 2022, the trust had a value of $14.1 million. Before the year ended in 2022, the trusts assets were distributed to Joey and Jenny.

2. Daisy owned three life insurance policies with Insurance Company one on her life, and one on the life of each of her children. All policies have a maturity of value of $100,000 and designate Daisy (or her estate) as the beneficiary. As of June 6, 2022, the policies on Joey and Jenny each had a value of $40,000.

3. A tract of undeveloped land in Traverse County, Michigan, was purchased by Daisy as an investment in 2002 for $300,000. To finance the purchase, Daisy obtained a mortgage from 9/10ths Bank. As of June 6, 2022, the land was worth $1 million and Daisy owed $100,000 on the mortgage.

4. Rental homes in Lapeer County, Michigan were transferred to Daisy from Joseph J. following his death and had a $1.2 million fair market value on June 6, 2022. The rental properties had a value of $600,000 when Joseph died; his original cost basis is unknown.

5. A vacation home in Coral Gables, Florida was held as joint tenants with right of survivorship in the names of Daisy Johnson, Joey J. Johnson, and Jenny Johnson-Schmidt. The property was purchased in 2002 for $400,000; $200,000 was provided by Daisy and each of her children contributed $100,000. On June 6, 2022, the home was worth $1,400,000.

6. Daisys Main Street residence is owned outright by her and had a value of $800,000 on June 6, 2022.

7. The accident that fatally injured Daisy was caused by a delivery truck for a national soft drink company, GatorCokesi. Not only was the truck in disrepair (i.e., bad brakes), but the driver was charged with driving under the influence. To avoid adverse publicity of a lawsuit involving obvious gross negligence, the GatorCokesi corporate office offered to settle any claims. After careful deliberation, Daisys co-personal representatives (Joey and Jenny) signed an absolute release of their claims. In return, the estate received $1,700,000 cash plus payment of all of Daisys medical expenses. Of the medical expenses, the doctors were paid directly by the beverage company. The settlement was received before the estate administration was completed and the due date for the Form 706.

8. Other assets owned by Daisy as of June 6, 2022 include:

Checking account at CNP Bank $ 18,000

State of Ohio Bonds (interest accrued to 6/6/2022) 205,000

Personal and household effects 60,000

Federal income tax refund receivable (2021 tax year) 4,000

9. Liabilities and expenses in connection with the administration of the estate include:

Daisys credit card and household bills $ 21,000

(e.g., utilities, house keeper) Federal income tax (1/1/2022-6/6/2022) 27,000

Funeral expenses 9,000

Attorneys fees 24,000

Accounting fees 10,000

Appraisal and court costs 6,000

Unpaid pledge to 1^st 2^nd Church Bldg. Fund 40,000

Because Joey and Jenny have some experience from handling their fathers estate, Daisys has designated them as co-personal representatives of her estate. The probate administration for the Estate of Daisy Johnson was completed December 16, 2022. Joey and Jenny were the sole heirs of her estate.

Please make use the following guidance and assumptions in the preparation of your return:

1. Disregard any request for information that is unavailable or make a separate statement for my attention concerning an assumption you made.

2. Some deductions require a choice between the income and estate taxes and cannot be deducted twice. Resolve all choices in favor of the Form 706.

3. Daisy did not make any taxable gifts in prior years.

4. Daisys Social Security number is: 123-45-6789

Joeys Social Security number is: 123-45-6788

Jennys Social Security number is: 123-45-6787

Josephs Social Security number is: 123-44-5566

5. Joeys Contact Information: 8675 Jenny Boulevard, Novi, Michigan 48111, 313.333.4444

6. Jennys Contact Information: 309 Becky Road, Ojai, California 90901, 818.888.9999

7. Daisys Date of Birth is June 6, 1943

8. Josephs Date of Death was February 1, 2002

9. Daisys Estate Administration was in the Lee-Roth County Probate Court File No. 2022-123456DE.

You should prepare a completed Form 706 Estate Tax Return for Ms. Johnson. Please complete a form 706.