Problem 7 Gift Tax Form 709

James A. and Ella R. Polk, ages 70 and 65, are retired physicians who live at 13319 Taylorcrest Street, Houston, Texas 77079. Their three adult children (Benjamin Polk, Michael Polk, and Olivia Turner) are mature and responsible persons. The Polks have heard that the Obama administration has proposed lowering the Federal gift tax exclusion from $5.25 million to $3 million. Although this change may not occur, the Polks feel they should take advantage of the more generous exclusion available under existing law. Thus, in 2013, the Polks make transfers of many of their high value investments. These and other gifts made during 2013 are summarized below. Asset Transfer Condominium located in Conroe (TX) acquired in 1999, cost $1.2 million, to Benjamin, Michael, and Olivia as equal tenants in common. Office building, located in Round Rock (TX) built in 2001, cost $1.8 million, to Benjamin, Michael, and Olivia as equal tenants in common. Vacation ranch in Bandera (TX) inherited by James from his father in 1996, value then $900,000, to Benjamin, Michael, and Olivia as equal joint tenants with right of survivorship. Ella used her separate property to reimburse her father (Alan Roberts) for his heart bypass operation. Paid for daughter's (Olivia's) wedding to John Turner James used his separate property to purchase a new automobile (BMW) as a graduation present (from medical school) for his favorite niece (Carol Polk) Donor James Ella $1,800,000 $1,800,000 2,200,000 2,200,000 2,400,000 -0 -0- 82,000 20,000 20,000 42,000 -0 Prepare 2013 gift tax returns (Form 709) for both of the Polks. A 2513 election to split gifts is made. The Polks have made no taxable gifts in prior years. Relevant Social Security numbers are 123-45-6789 (James) and 123-45-6788 (Ella).

ACC 433-01 CHAP 27 HOMEWORK ASSIGNMENT (due 6/3) YOU MUST DO THIS ASSIGNMENT WITH ONE PARTNER WHOM YOU HAVE NOT PREVIOUSLY PARTNERED WITH BEFORE Prepare a Gift Tax Return (Form 709) based upon Problem 7 of Appendix E in your textbook. A copy of Problem 7 is attached. You can use software such as the HR Block software, which comes with your textbook or other types of commercial software such as Turbo-Tax, LACERTE, Drake, etc. to prepare this income tax return. You may also handwrite the return, but make sure your writing is clear. If I can't read it, you will not receive points. Partial credit will be given on this assignment. Appendix E Practice Set Assignments-Comprehensive Tax Return Problems You must determine whether a Schedule M-3 is to be prepared. Cotton's accounting firm and the corporate books and records provide the following additional information. Distributions to shareholders $1,890,000 (831,400) Accumulated adjustments account (AAA), beginning balance Salaries and wages include $1.2 million of deferred compensation. ' Of the bad debt expense, $230,000 is not deductible this year. Of other expenses, $3,700 is permanently not deductible. Using the preceding information, prepare a complete Form l 120S and a Schedule K-1 for Max Martin, 1824 Church Street, Concord, NC 28025. If any information is missing, make realistic assumptions. James A. and Ella R. Polk, ages 70 and 65, are retired physicians who live at 13319 Taylorcrest Street, Houston, Texas 77079. Their three adult children (Benjamin Polk, Michael Polk, and Olivia Turner) are mature and responsible persons. The Polks have heard that the Obama administration has proposed lowering the Federal gift tax exclusion from $5.25 million to $3 million. Although this change may not occur, the Polks feel they should take advantage of the more generous exclusion available under existing law. Thus, in 2013, the Polks make transfers of many of their high value investments. These and other gifts made during 2013 are summarized below. Donor Asset Transfer Condominium located in Conroe (TX) acquired in 1999, cost $1.2 million, to Benjamin, Michael, and Olivia as equal tenants in common. Office building, located in Round Rock (TX) built in 2001, cost $1.8 million, to Benjamin, Michael, and Olivia as equal tenants in common. Vacation ranch in Bandera (TX) inherited by James from his father in 1996, value then $900,000, to Benjamin, Michael, and Olivia as equal joint tenants with right of survivorship. Ella used her separate property to reimburse her father (Alan Roberts) for his heart bypass operation. Paid for daughter's (Olivia's) wedding to John Turner James used his separate property to purchase a new automobile (BMW) as a graduation present (from medical school) for his favorite niece (Carol Polk) James Ella $1,800,000 $1,800,000 2,200,000 2,200,000 2,400,000 -0- -020,000 82,000 20,000 42,000 -0- Prepare 2013 gift tax returns (Form 709) for both of the Polks. A 2513 election to split gifts is made. The Polks have made no taxable gifts in prior years. Relevant Social Security numbers are 123-45-6789 (James) and 123-45-6788 (Ella). P~OBlEM 8-ESTATE TAX (FORM 706) Harriet C. Harper, age 74, died as a result of an automobile accident on June 6, 2013. At the time of her death, Harriet lived' at 1520 Marlin Drive, Clearwater, FL 33758. She was predeceased by her husband, John W. Harper, who died in 2001. E-15