Need to do a Tax Return Form 706

Please prepare a complete Form 706 Estate Tax Return for McKenzie. Do not discuss, disclose or share your work on this Assignment (or any related research) with anyone in the Class. You may make the following assumptions in your preparation of Form 706:

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.

WALSH COLLEGE SUMMER 2017 TAX 532 HOMEWORK ASSIGNMENT #1 Prof. Ronald T. Charlebois Due: 8/14/2017 (Week #8) Points: 15 McKenzie G. Germain, age 74, died as a result of an automobile accident on September 6, 2016. At the time of her death, Ms. Germain resided at 152 Mockingbird Lane, Leland, Michigan 48123. She was predeceased by her husband, Jonathon Germain, who died in 2005. McKenzie is survived by her two adult children, Jackson Germain and Rosalyn Germain-Garfield. McKenzie's estate is summarized as follows: 1. Upon Jonathon's death his will established a marital deduction trust with $1 million in assets. Under the terms of this trust, McKenzie received a life estate with the remainder passing in equal shares to their children (i.e. Jackson and Rosalyn). To obtain the marital deduction for Jonathon's estate, his executor filed a timely and proper QTIP election on Form 706. On September 6, 2016, the trust had a value of $2.1 million. By October 31, 2016, the QTIP trust distributed all these assets to Jackson and Rosalyn. 2. McKenzie 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; all name McKenzie or her estate as the beneficiary. As of September 6 2016, the policies on Jackson and Rosalyn each had a value of $40,000. 3. A tract of undeveloped land in Traverse County, Michigan, was purchased by McKenzie as an investment in 2007 for $300,000. To help finance the purchase, McKenzie obtained a mortgage from Comerica Bank. As of September 6, 2016, the land was worth $1 million and McKenzie owed $100,000 on the mortgage. 4. Rental homes in Lapeer County, Michigan were inherited from Jonathon and were appraised at $1.2 million as of September 6, 2016. The rental properties had a value of $600,000 when Jonathon died in 2005; his original cost basis is unknown. 5. A vacation home in Miami, Florida was held as joint tenants with right of survivorship in the names of McKenzie G. Germain, Jackson Germain and Rosalyn Germain-Garfield. The property was purchased in 2008 for $400,000; $200,000 was provided by McKenzie and $100,000 was furnished by each of her children. On September 6, 2016, the home was worth $1,400,000. 6. McKenzie's Mockingbird Lane residence is owned by her and had a value of $800,000 on September 6, 2016. 7. The accident that fatally injured McKenzie was caused by the delivery truck of a national soft drink company, Not-Just-Water. Not only was the truck in disrepair (i.e., bad 1 of 3 brakes), but the driver was charged with driving under the influence. To avoid adverse publicity of a lawsuit involving obvious gross negligence, the corporate office offered to settle any claims. After careful deliberation, McKenzie's co-personal representatives (Jackson and Rosalyn) signed a release. In return, the estate received $700,000 cash plus payment of all of McKenzie's medical expenses. Of the medical expenses, the doctors were paid directly by the bottling company. The settlement was received by the estate before it was closed and the Form 706 was filed. 8. Other assets owned by McKenzie as of September 6, 2016 include: Checking account at PNC Bank $ 18,000 State of Ohio Bonds (interest accrued to 9/6/2016) 205,000 Household furnishings and misc. personal property 60,000 Federal income tax refund receivable (2015 tax year) 4,000 9. Liabilities and expenses in connection with the administration of the estate include: McKenzie's credit card and household bills $ 21,000 (e.g., utilities, house keeper) Federal income tax (1/1/2016-9/6/2016) 21,000 Funeral expenses 9,000 Attorney's fees 24,000 Accounting fees 10,000 Appraisal and court costs 6,000 st nd Unpaid pledge to 1 2 Church Bldg. Fund 40,000 Because Jackson and Rosalyn had experience handling their father's estate, McKenzie's Last Will and Testament designated both of them as co-personal representatives of her estate. The probate of the Estate of McKenzie G. Germain is expected to be completed on or before December 31, 2016. Jackson and Rosalyn are the sole heirs. Please prepare a complete Form 706 Estate Tax Return for McKenzie. Do not discuss, disclose or share your work on this Assignment (or any related research) with anyone in the Class. You may make the following assumptions in your preparation of Form 706: 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. McKenzie did not make any taxable gifts in prior years. 4. McKenzie's Social Security number is: Jackson's Social Security number is: Rosalyn's Social Security number is: Jonathon's Social Security number is: 2 of 3 123-45-6789 123-45-6788 123-45-6787 123-44-5566 5. Jackson's Contact Information: 888 Mt. Michalak Street, Bay City, Michigan 48708, 989.333.4444 6. Rosalyn's Contact Information: 212 Jenner Road, Toluca Lake, California 90901, 818.888.9999 7. McKenzie's Date of Birth is June 6, 1941 8. Jonathon's Date of Death is February 1, 2005 9. McKenzie's Estate Administration was in the Leland County Probate Court File No. 2016-123456DE 3 of 3