Walter passed away this year,leaving a will bequeathing his wife with $80,000 in cash,in addition to his stocks and land,to be held in a spousal trust on her behalf.The trust will pay her the annual income generated by the trust during her lifetime.
Additionally,Walter's 33 year old son,Steven,is to receive a building to be held in a trust until Steven reaches the age of 45.Steven will also receive the assets in his mother's (Walter's wife)trust upon her death.
The assets transferred to Walter's wife consist of land with an ACB of $100,000 and a FMV of $300,000,and stocks valued at $200,000 with a cost base of $150,000.
The building transferred to Steven has an ACB of $200,000,UCC of $180,000,and FMV of $300,000.
Required:

Question

Quizplus · Accepted Answer

The Answer is A)Walter's estate will have a taxable capital gain of $50,000 and recapture of $20,000 upon the disposal of the building bequeathed to Steven.
Building transferred to Steven's testamentary trust:

A)Walter's estate will have a taxable capital gain of $50,000 and recapture of $20,000 upon the disposal of the building bequeathed to Steven. Building transferred to Steven's testamentary trust: B)There will be no tax consequence on the $80,000 cash received by Walter's wife. The other assets will be transferred to the testamentary spousal trust at their tax values,resulting in no immediate tax effects.

B)There will be no tax consequence on the $80,000 cash received by Walter's wife.
The other assets will be transferred to the testamentary spousal trust at their tax values,resulting in no immediate tax effects.

Walter Passed Away This Year,leaving a Will Bequeathing His Wife