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Estate and gift tax

Estate and gift tax

See attached word document with 2 problems related to estate and gift tax. There is a case description then 3 questions at the bottom of page 1. Then there are 3 questions at the top of page 2 then the case description for those questions. Please review and let me know if anyone can help me today. Thanks.

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Problem 1:

Mary was married on January 2d of this year to Gary Golddigger. Despite Gary’s objection to Mary’s philanthropic ways, he signed a consent on a timely filed form 709 to split all gifts made by Mary during the year.

For his promise to marry and provide undying love and affection, Mary agreed on January 1st to transfer 10,000 shares of XYZ, Inc. common stock to Gary and in return Gary transferred a legally binding contract promising to marry Mary the following day. The stock was valued at $50 per share on January 1st. Mary actually didn’t get around to calling her broker until they returned from the honeymoon on January 10th and the stock was retitled at that time when it was worth $52 per share.

Rent-free use of an office owned by Mary provided to her daughter, Charlotte, out of which she will run her campaign to run for district attorney–rental value for this year–$40,000.

Mary pays her daughter Sheila’s private high school $5,000.00 to cover her expenses (in addition to the normal tuition) to travel to Florida to participate in a weeklong spring tournament for the school’s field hockey team.

Mary pays $75,000 to Dr. Cutslash for plastic surgery for her ex-husband to enhance his possibilities as an aspiring soap opera actor. She has been divorced from him for 18 months.

Mary paid $50,000 to her indigent sister to be used towards a first-time home purchase.

Mary exercised a power of appointment donated to her by her Mom over a trust created by Mom in Mom’s will. Mary’s power over the corpus was limited to exercise in favor of Mom’s children and grandchildren for their support, education, and health. Mary exercised such power in favor of her brother and appointed $15,000 of principal to such brother who used the money for his family’s medical insurance that he was purchase as a result of the Affordable Care Act.

When Gary threatens to leave, Mary agrees to take out a life insurance policy on her life and names Gary as…


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