Question 1

In 2017,Mr.Ames,an unmarried individual,made a gift of real estate to his nephew.Compute the amount subject to the federal gift tax in each of the following situations.
a.FMV of the real estate was $1,800,000,and the transfer was Mr.Ames' first taxable gift.
b.FMV of the real estate was $7,250,000 and the transfer was Mr.Ames' first taxable gift.
c.FMV of the real estate was $2,300,000.Two years ago,Mr.Ames made his first taxable gift of marketable securities with a $3,920,000 FMV in excess of the annual exclusion.

Accepted Answer

The answer of In 2017,Mr.Ames,an unmarried individual,made a gift of...

Question 2

Mr.McCann died this year.During his lifetime,he made taxable gifts significantly in excess of his lifetime exclusion.Mr.McCann's taxable estate was $21.9 million.Compute the estate tax on this estate.

Accepted Answer

Based on the information provided, we know that Mr. McCann's taxable gifts during his lifetime exceeded his lifetime exclusion, indicating that any taxable estate would also be subject to the estate tax. The current federal estate tax rate is 40%, and the taxable estate of $21.9 million would result in an estate tax of $8.760 million.

Question 3

Ms.Mollani owns stock in two S corporations,Aloha and Honu.This year,she had the following income and loss items:   Compute Ms.Mollani's AGI under each of the following assumptions.
a.She materially participates in Aloha's business but not in Honu's business.
b.She materially participates in Honu's business but not in Aloha's business.
c.She materially participates in both corporate businesses.
d.She does not materially participate in either business.

Accepted Answer

The answer of Ms.Mollani owns stock in two S corporations,Aloha...

Question 4

Which of the following does not reduce a decedent's taxable estate?

Accepted Answer

Testimentary transfers to the decedent's children is not one of the options that reduces a decedent's taxable estate. However, funeral expenses, testamentary transfers to charitable organizations, and testamentary transfers to the decedent's spouse can all reduce the decedent's taxable estate.

Question 5

Beverly earned a $75,000 salary and recognized a $7,200 loss on the sale of corporate stock this year.Compute her AGI in each of the following independent cases.
a.Beverly had no other capital transactions this year.
b.Beverly recognized a $13,500 capital gain on the sale of mutual fund shares.
c.Beverly received a $9,500 capital gain distribution from a mutual fund and had a $3,200 capital loss carryforward from a previous year.

Accepted Answer

The answer of Beverly earned a $75,000 salary and recognized...

Question 6

In 2016,Mr.Yang paid $160,000 for a corporate bond with a $200,000 stated redemption value.Based on the bond's yield to maturity,amortization of the $40,000 discount was $3,024 in 2016 and $2,960 in 2017.Mr.Yang sold the bond for $169,500 in December 2017.What are his tax consequences in each year assuming that:
a.He bought the newly issued bond from the corporation?
b.He bought the bond in the public market through his broker?

Accepted Answer

The answer of In 2016,Mr.Yang paid $160,000 for a corporate...

Question 7

Mr.Carp,a single taxpayer,recognized a $44,000 long-term capital gain,a $12,000 short-term capital gain,and a $10,000 long-term capital loss.Compute Mr.Carp's 2017 income and Medicare contribution tax if his taxable income before consideration of his capital transactions is $465,000,none of which is investment income

Accepted Answer

The answer of Mr.Carp,a single taxpayer,recognized a $44,000 long-term capital...

Question 8

Mr.Lainson died this year on a date when the total FMV of his property was $12 million and his debts totaled $450,000.His executor paid $15,000 of funeral expenses and $50,000 of accounting and legal fees to settle the estate.Mr.Lainson bequeathed $1 million to Villanova University,$200,000 to the Lutheran church,and $3.5 million to his surviving spouse.He left the remainder of the estate to his children.Compute Mr.Lainson's taxable estate.

Accepted Answer

The answer of Mr.Lainson died this year on a date...

Question 9

Mrs.Heyer inherited real estate from her mother.The mother's basis in the real estate was $382,000,and the fair market value at the date of the mother's death was $900,000.The mother's taxable estate was only $2.4 million,so the estate did not owe any federal estate tax.This year,Mrs.Heyer sold the real estate for $875,000.Compute her gain or loss recognized on sale.

Accepted Answer

When Mrs. Heyer inherited the real estate, the property received a "step-up" in basis to its fair market value at the time of her mother's death. So her basis in the property is $900,000. Since she sold the property for $875,000, she has a loss of $25,000 ($875,000 - $900,000).

Quiz 16: Investment and Personal Financial Planning

Mr.McCann died this year.During his lifetime,he made taxable gifts significantly in excess of his lifetime exclusion.Mr.McCann's taxable estate was $21.9 million.Compute the estate tax on this estate.

Which of the following does not reduce a decedent's taxable estate?