22.yer, Wy
Rose owns a house in Port Aransas. She signs a deed that transfers the house to her friend,
Fred, for his life. According to the deed, when Fred dies, the house will revert back to Rose
or, if she is dead, then to her estate. Rose dies before Fred. Will any of the value of the
house be included in Rose’s gross estate for estate tax purposes? Why or why not? (Worth
4 points)
She signs a deed trunstars
erfriund and when fred dies,
e will rever back to Roser
23. In 2019, Duke makes a gift of $40,000 to his daughter, Dixie, and a gift of $30,000 to his
Wife, Wendy. Duke makes no other gifts in 2019. Answer the following questions (worth 2
points each):
Has Duke made a taxable gift to Wendy? Why or why not?
th
STAD Because
e nowe to her
the house
a.
iles, the gift for donighter is 30, ooo ayeur
b.
Has Duke made a taxable gift to Dixie? Why or why not?
No, because his wife, no limut gift for merred
-2
24. Chris makes the following gifts in 2019:
$20,000 to his friend, Joe 3,
$1,000,000 to his wife, Sally
Noé
$6,000,000 to St. Jude’s Children’s hospital, a qualified 501(c)(3) organization Gaveniach
$10,000 to his niece for her to pay tuition no
Will Chris owe gift tax for making any of these gifts? Why or why not? (Explain fully!)
(Worth 4 points)
kan made 30,000
his friend
limet for
Gooo, ooo for Jude;
Gift
No, b. he
his wife
ho
children’s hospitant and gift for his
10,000
nice,
25. Explain the difference between an Inter Vivos Trust and a Testamentary Trust. (Worth.3..
points)
Vivos Trust: trust created in liftime.
for grantena
Testamentary Frust, trust created
etter death for granton
Page 4 of 6
30. Harry and Wendy are married. They own the following assets:
1. A house worth $1,000,000 that Harry purchased before his marriage.
2. A savings account with $250,000 in Harry’s name and funded with money that Harry
and Wendy have earned during their marriage.
3. A checking account with $50,000 that Harry and Wendy own as joint tenants with right
of survivorship and is funded with
with money that Harry inherited from his aunt.
5. Personal property in their house such as furniture, kitchen equipment and utensils, etc.,
worth $30,000 that they have acquired during their marriage.
6. A piece of commercial real estate that Harry inherited from his grandfather. Harry and
his brothers, Bill and Alex, are owners of the building, and each have an equal share. The
real estate is in a prime location and is worth $12,000,000.
Harry dies in January 2019. Please answer the following questions. (NOTE: feel free to
show your work and possibly receive partial credit for answers if you don’t get the final
answer correct!)
What is the value of Harry’s probate estate? (Worth 6 points
a.
ܝܘܘ
-4
?
50.2,owy + 28.0oo, +2500s +65,000+
15,6
4,63
900
+ 4,000,00 -19
b.
– 2
Assume that Harry’s Will leaves everything to Wendy. Will Harry’s estate owe any
estate tax? Why or why not? (Worth 4 points)
aus stat
s
cal
sposed is net susjec?
stat
tex
2.
30. Harry and Wendy are married. They own the following assets:
1. A house worth $1,000,000 that Harry purchased before his marriage.
2. A savings account with $250,000 in Harry’s name and funded with money that Harry
and Wendy have earned during their marriage.
3. A checking account with $50,000 that Harry and Wendy own as joint tenants with right
of survivorship and is funded with
with money that Harry inherited from his aunt.
5. Personal property in their house such as furniture, kitchen equipment and utensils, etc.,
worth $30,000 that they have acquired during their marriage.
6. A piece of commercial real estate that Harry inherited from his grandfather. Harry and
his brothers, Bill and Alex, are owners of the building, and each have an equal share. The
real estate is in a prime location and is worth $12,000,000.
Harry dies in January 2019. Please answer the following questions. (NOTE: feel free to
show your work and possibly receive partial credit for answers if you don’t get the final
answer correct!)
What is the value of Harry’s probate estate? (Worth 6 points
a.
ܝܘܘ
-4
?
50.2,owy + 28.0oo, +2500s +65,000+
15,6
4,63
900
+ 4,000,00 -19
b.
– 2
Assume that Harry’s Will leaves everything to Wendy. Will Harry’s estate owe any
estate tax? Why or why not? (Worth 4 points)
aus stat
s
cal
sposed is net susjec?
stat
tex
2.
26.
John and Mary own a home worth $85,000. They sell the house to their daughter, Jessica,
for $45.000. What giff tax conseqüences, if any, will result from this transaction? (Worth 3
points)
It will be 15,000 becaus they
canh give for.doughter 30,000.
27.
When Barrett dies, he owns stock of ABC Company. The executor of Barrett’s estate is
trying to determine the value of the stock for Barrett’s probate estate and gross estate. How
should the executor calculate the value of the stock? (Worth 2 points)
the present waliane et the stock.
28.
Carl establishes a trust for his son, Shane, which will last for his lifetime. The trust
agreement includes the following language:
At his death, Shane shall have the power and authority to appoint any remaining trust
property to anyone.
Is this is a general power of appointment or a limited power of appointment, and explain?
(Worth 4 points)
It is limited
Shen
power et apsiantment
any remaining Trust Property to anyone
here the power authority to appoint
What is a lack of marketability discount in relation to a closely held business? (Worth 2
points)
29.
ܙ
lack of marketability disrease in relation.
។
17.
Review the following clause:
No beneficiary of the income or corpus of any trust created herein shall have any right or
power to anticipate, pledge, assign, sell, transfer, alienate or encumber his or her interest
in such trust in any way; nor shall any such interest in any manner be liable for or subject
to the debts, liabilities or obligations of such beneficiary or claim of any sort against such
beneficiary.
This is an example of which of the following clauses:
a
Spendthrift Clause
b.
Crummey Clause
Limitation on Distributions Clause
d.
All of the above
c.
1.8.
a.
The Rule Against Perpetuities:
Provides that the Grantor cannot revoke or amend the trust agreement.
b. Provides that the trust end 21 years after the date of the death of the Grantor.
Provides for a way to prevent a trust from going on forever.
d. None of the above
a.
19. If the trustee of a revocable trust distributes income to a beneficiary, who pays the income
tax on that income?
Grantor
Beneficiary
C.
Trustee
d. Corporate Trustee
20 Which of the following are reasons one might use a trust:
a: Creditor protection
b. Where there are split interests in property
To minimize taxes
d. To protect a beneficiary
e. To provide for a minor
f All of the above
None of the above
c.
he
SHORT ANSWER
Please write legibly! If I cannot read it, then you will not get credit!
21.
2 2
Bill owns a life insurance policy on his own life with a death benefit of $2,000,000. In
August 2015, Bill transferred ownership in the life insurance policy to his sister, Susan.
Bill dies in October 2019. Will it be included in his gross estate for estate tax purposes?
(Explain fully!) (Worth 4 points)
yes, it will be because they will look
for any transferred in f months.
۱
Page 3 of 6
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