Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Hank is a single individual who possesses a life insurance policy worth $306,000 that will pay his two children a total of $830,000 upon his

Hank is a single individual who possesses a life insurance policy worth $306,000 that will pay his two children a total of $830,000 upon his death. This year Hank transferred the policy and all incidents of ownership to an irrevocable trust that pays income annually to his two children for 15 years and then distributes the corpus to the children in equal shares.Reference the tax rate schedule in Exhibit 25-1 and the Unified Credit schedule in Exhibit 25-2 to answer this problem.

a.

Calculate the amount of gift tax due (if any) on the gift. Assume that Hank has made only one prior taxable gift of $5 million in 2011.

b.

Calculate the amount of cumulative taxable transfers for estate tax purposes if Hank dies this year but after the date of the gift. At the time of his death, Hanks probate estate is $8.2 million and it is to be divided in equal shares between his two children.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Law, Business And Society

Authors: Tony McAdams, Kiren Dosanjh Zucker, Kristofer Neslund, Kari Smoker

12th Edition

1259721884, 978-1259721885

More Books

Students also viewed these Accounting questions

Question

Always have the dignity of the other or others as a backdrop.

Answered: 1 week ago