Question 1

Ingrid's projected adjusted gross estate is as follows.

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Question 2

Even though it results in more estate tax liability,the executor of an estate uses date of death value (rather than § 2032 alternate valuation date).

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Question 3

Using investments worth $1 million,Roland establishes a trust,life estate to Melinda,remainder to Dana.

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Question 4

At the time of her death in 2009,Lila owns 50% of the stock in Kingfisher Corporation,with the balance of the stock held by family members.Kingfisher Corporation's total profits for the past five years are $3,000,000,and the book value of its stock is $2,000,000.If 8% is an appropriate rate of return and goodwill exists,what is a possible value for the stock to be included in Lila's gross estate?

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Question 5

In arriving at the value of stock in a closely held business,the IRS frequently imputes goodwill.Comment on how the following independent factors would affect the determination of goodwill.

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Question 6

In February 2008,Michelle sold real estate (adjusted basis of $300,000)for $800,000.Under the terms of the sale,the purchaser issued two notes of $400,000 each,payable annually.In January 2009 and when the notes are worth $760,000,Michelle gives the notes to her son.What,if any,are Michelle's tax consequences?

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Question 7

What are some of the pitfalls in the use of § 2032A (special use valuation method)?

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Question 8

If the special use valuation method of § 2032A is elected and certain continuing requirements are not satisfied,recapture occurs.

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Question 9

Merwin and Phyllis have always lived in a community property state.At the time of Merwin's prior death in 2009,they held land that cost them $600,000 but was valued as follows.
  
Under Merwin's will,his half of the land passes to their daughter,Grace.What income tax basis will Phyllis and Grace have in the land,if Merwin's estate:

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Question 10

Dewey and Doris are married and live in a common law state.Dewey owns some real estate (fair market value of $520,000)which they would like to give to their five adult married children.The spouses of their children (e.g. ,son-in-law,daughter-in-law)are to be included in the gifts.Dewey and Doris do not want to use any of their unified transfer tax credit.Assuming a constant annual exclusion in the amount of $13,000,suggest a viable way to structure the transfer.

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Question 11

Clancy and Maureen are husband and wife and have always lived in a community property state.When Clancy learns that he is terminally ill,he gives to Maureen all of his share of the community investments that have declined in value.Why?

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Question 12

Abigail makes a gift of stock (basis of $600,000;fair market value of $1,200,000)to her son,Spencer.As a result of the transfer,Abigail paid a gift tax of $120,000.What is Spencer's income tax basis in the stock if the gift occurred in 2009?

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Question 13

At the time of his death,Al owned a majority interest in Macaw Corporation,a closely held holding company.Macaw's major asset is stock in ABC Grocers,a regional supermarket chain.The ABC stock has a per share basis to Macaw of $50 and is currently worth $2,000.In what manner,if any,may these facts have a bearing on the value of the Macaw stock included in Al's gross estate?

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Question 14

Mel's estate includes a number of notes receivable signed by his daughter,Tammy.These notes were issued by Tammy on different occasions when she obtained funds from Mel.The total face amount of these notes is $150,000.The notes are forgiven by Mel's will.How much,if any,regarding these notes should be included in Mel's gross estate?

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Question 15

Brandi is the founder of Carmine Corporation and owns all of its stock,both common and preferred.The preferred stock is noncumulative and possesses no preferential rights as to liquidation.In 1992 and when the common stock has a value of $1,000,000,Brandi gives it to her adult children.She retains the preferred stock which,at this time,has a value of $200,000.In 2009,Brandi dies.Values on the date of death are: $2,000,000 for the common stock and $300,000 for the preferred.

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Question 16

In April 2008,Fred gives his mother,Pearl,real estate (basis of $300,000;fair market value of $900,000).Fred paid no Federal gift tax on the transfer.Before Pearl's death in March 2009,she makes $50,000 in capital improvements to the property.The real estate is worth $940,000 when Pearl dies.What is the income tax basis of the property to Pearl's heir under each of the following assumptions?

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Question 17

In 1985,Art and Kim acquire land for $500,000 with Art furnishing $200,000 and Kim $300,000 of the purchase price.Title to the property is listed as equal joint tenancy with right of survivorship.Art dies first in 2009,when the land is worth $2,000,000.What is Kim's income tax basis in the property under each of the following assumptions?

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Question 18

Christopher makes a gift of securities (basis of $800,000;fair market value of $500,000)to his son,Sandy.As a result of the transfer,Christopher paid a gift tax of $80,000.What is Sandy's income tax basis in the securities if the gift occurred in 2009?

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Question 19

In each of the following independent situations,describe the effect of the disclaimer procedure on Ron's taxable estate.In this regard,advise as to how much should be disclaimed,by whom,and whether a disclaimer should be made.Assume the year involved is 2009.

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Question 20

A well-known artist dies and among her assets are a large number of her paintings.What approach might be taken to lower the value of her estate?

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Quiz 19: Family Tax Planning