In 1985,Thalia purchases land for $900,000 and lists title in the names of her daughters as follows: "April and Theresa,joint tenants with right of survivorship." In 1990,April and Theresa purchase an apartment building for $1 million as equal tenants in common;April furnished $400,000 and Theresa furnished $600,000 of the cost.In the current year,April dies first in 2009 when the land is worth $1.5 million and the apartment building is worth $2 million.One of the results of these transactions is:

Question

Quizplus · Accepted Answer

When Thalia purchased the land in 1985 and listed the title in the names of her daughters as joint tenants with right of survivorship, she made a gift to her daughters. However, since Thalia survived both daughters and the land was not owned by April at the time of her death, none of the land is included in April's gross estate.

In 1990, when April and Theresa purchased the apartment building as equal tenants in common, April made a gift to Theresa of $100,000 ($400,000 cost - 40% ownership interest).

At the time of April's death in 2009, her share of the apartment building is included in her gross estate. Since April owned 40% of the apartment building, her gross estate includes $800,000 (40% * $2 million) as to the apartment building. In addition, since April owned 50% of the land at the time of her death and the land was worth $1.5 million, her gross estate includes $750,000 (50% * $1.5 million) as to the land. Therefore, April's gross estate includes $1,550,000 ($800,000 + $750,000) as to these properties.

In 1985,Thalia Purchases Land for $900,000 and Lists Title in the Names