is the total amount of taxable gifts L must report? Computing Taxable Gifts. During 2018, Z, a widow, makes the following transfers: Fair Market Value Real estate located in France to son J. ... $500,000 City of Philadelphia municipal bonds to daughter K. Payment to local hospital for medical expenses of brother-in-law M 120,000 22,000 What is the total amount of taxable gifts Z must report? M or M's estate. At M's his 60-year-old father was still living and Trust B was worth $2.1 million. Assuming a 5.0% interest rate, what are the values of the inclusions in M's gross estate attributable to M's interests in Trust A and Trust B? (See Table S, contained in Appendix A-1.) Computing Gross Estate. Upon A's death, certain assets were valued as follows: 15-29 Fair Market Value Probate estate Insurance proceeds on a policy on A's life. The policy has always been owned by A's niece, the beneficiary. Corpus of Trust A. A possessed the right to give the ownership of the corpus to herself or any of her family. In her will she left the corpus to cousin K S 750,000 150,000 15,000.000 Based on these facts, what is the value of A's gross estate? assets were valued: 15-30 Computing Gross Estate. Upon G's death, the following Fair Market Value $20,350,000 Probate estate 38,000 Life insurance proceeds on G's life payable to the estate Annuity payable to G's widow out of G's employer's pension plan. Corpus of revocable trust created by G for the benefit of his children 10 years prior to death. Upon G's death, the trust becomes irrevocable. 20,000 1,000,000 What is the value of G's gross estate? gift in revocably transfers a Owner. On September 1, the ate and Gift Taxation 5-25 Basis of Gifted Assets. During the current year, L received a gift of land from his grandmother. The land had a basis to the grandmother of $100,000 and a fair market value of $264,000 on the date of the gift. Assume a gift tax of $30,000 was paid on the transfer. a. If L subsequently sells the land for $300,000, how much gain or loss will he recognize? b. What would be the amount of L's recognized gain or loss on the sale if the land had a tax basis of $325,000 (rather than $100,000) to the grandmother? 5-26 Marital Deduction. F died during the current year, leaving a gross estate valued at $15 million. F's will specifically provided that no amount of her wealth was to be left to her estranged husband, G. However, under applicable state law, G is legally entitled to $1 million of his deceased wife's assets. How does the payment of $1 mil- lion affect the value of: F's gross estate? b. F's taxable estate? 5-27 Gross Estate Inclusions. Q On the date of Q's death, he owned corporate bonds, principal amount of $50,000 with accrued interest of $3,950. On the date of death, the bonds were selling on the open market for $54,000. Six months later the market price of the bonds had dropped to $51,500; there was $3,200 of accrued interest on the bonds as of this date. Neither market price includes any payment for accrued interest. a. Assuming the executor of Q's estate does not elect the alternate valuation date, what amounts should be included in Q's gross estate because of his ownership of the bonds? b. Assuming the executor does elect the alternate valuation date, what amounts should be included in Q's gross estate? a. was a cash basis taxpayer who died in the current year 5-28 Interests in Trusts Included in Gross Estate. M's mother left property in trust (Trust A), with the income payable to M for M's lifetime and the remainder to M's daughter. At M's death, Trust A was worth $6.5 million. M's grandfather created a trust (Trust B), with the income payable to M's father for his lifetime. Upon the aindar in Trust B was payable to M or M's estate. At M's th $2.1 million. Fs gross estate. (See Included in Gross Estate. In 1993, P transferred $500,000 of assets into an irrevocable trust for the exclusive benefit of his children. Under the terms of the trust agreement, annual income must be distributed among the children according to P's direction. When the youngest child attains the age of 25 years, the trust corpus will be distributed equally among the living children. P dies in the current year while the trust is still in existence and the corpus has a fair market value of $3,200,000. How much, if any, of the corpus must be included in P's gross estate? -35 Powers of Appointment. In 1999, donor D transferred $100,000 of assets into an ir- revocable trust for the exclusive benefit of her minor grandchildren. Under the terms of the trust agreement, the grandchildren will receive the annual income from the trust, and when the youngest grandchild attains the age of 21, the trust corpus will be divided among the living grandchildren as S, D's only child, so directs. S dies in the current year while the trust is still in existence and the corpus has a fair market value of $400,000. S's valid will directs that the corpus of the trust will go entirely to grandchild Q. How much, if any, of the corpus must be included in S's gross estate? 5-36 Including Insurance in Gross Estate. Decedent R left a probate estate of $3,000,000. Two years prior to his death, R gave all incidents of ownership in an insurance policy on his own life to his daughter S, the policy beneficiary. Because the policy had a substantial cash surrender value, R paid a gift tax of $77,000 on the trans- fer. Upon death, the insurance policy paid $5,000,000 to S. What is the value of R's gross estate? brother R as joint tenants with right of survivorship. R made no contribution toward the purchase price. This year Q died. At the time of his death, the land was worth $1.2 million. R became the sole owner of land upon Q's death. What are the gift tax consequences of the creation of the joint tenancy? b. How much of the date of death value of the land must be included in Q's gross estate? How much would be included in the gross estate of R if R, rather than Q, died 5-37 Joint Tenancy. In 2006, Q paid $500,000 for 100 acres of land and took title with his a. c. 15-38 Computing Taxable Estate. Decedent T left a gross estate for tax purposes of $8,000,000. T had personal debts of $60,000 and his estate incurred funeral ex- penses of $12,000 and legal and accounting fees of $35,000. T's will provided for $100,000 bequest to the American Cancer Society, with all other assets passing to his grandchildren. Compute T's taxable estate. in the current year