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jonacpa, Tutor
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I am a Graduate student in the field of Taxation. I need to file an Estate/Gift tax return. Can someone help me?
Submitted: 11 years ago.
Category: Homework
Customer: replied 11 years ago.
Reply to jonacpa's Post: It starts by saying a couple won a 24 million dollar lottery. The couple go on a spending spree. They pay for their child's college tuition, buy a house, buy their sister a house, etc. With each situation, we have to determine how it would effect their tax return. We have to complete the tax return form and state why certain items are exempt and others are included. Is this something you might be able to help with?
Customer: replied 11 years ago.
Reply to jonacpa's Post: Here is the Prompt. Let me know if you would be able to do this in the next 48 hours. I just need something to go by, because it's pretty complicated. Thanks!

Mike and Carol have three children. Their oldest daughter, Lisa, is 30 and married to John. Lisa and John have two children, Jack (who is 4) and Andrew (who is 2). Ryan is 25 and single. Nichole is 19 and single. Mike and Carol won the lottery in January 2004. They received $20,500,000 in one lump sum, after payment of taxes and other deductions. Mike and Carol immediately went on a spending spree.

1.     In january, they paid Nichole's spring 2005 tuition in the amount of $15,000, paid her room & board in the amount of $5,000, purchased her books in the amount of $700, and promised to give her $1,000 per month for spending money from January through May.

2.     In February, they paid off the mortgage on their house in the amount of $500,000. They also purchased a new house at the beach for $6,000,000.

3.     In February, they gave Lisa $325,000 to pay off the mortgage on her house. Lisa and John sold their house and purchased a larger house in a better neighborhood.

4.     In march, they purchased 5 cars, a Mercedes for Carol ($72,000), a Porsche for Mike ($90,000), and three BMW’s- one for each other their children ($50,000 each).

5.     In April, they contributed $55,000 to a 529 Plan for each of Jack and Andrew.

6.     In May, they each gave $25,000 to each of their siblings: Owen, Paul, Jane, Larry, Tom, Sheryl, and Doris.

7.     In May, they paid off the mortgage on Mike’s parent’s house in Leisure World. The balance due on the mortgage was $50,000. Mike’s parents, Henry and Marge, were having a difficult time because their social security payments were not sufficient to permit them to continue to pay the mortgage and the increased community association dues.

8.     In June, they sent Carol’s parents, Larry and Loretta, on an extended European vacation. The cost of the tour package was $15,000 per person. Larry and Loretta were very excited because they had never traveled outside of the U.S.

9.     In June, they paid the medical bills for John’s father, who needed a bone marrow transplant at the City of Hope. The cost was $100,000.

10.     In July, they bought a house for Ryan. The down payment was $350,000. They put the house in Ryan’s name. They thought that he could live there rather than with them while he looked for a job. Although they made the monthly payments of $1,000 initially, it was their plan that once Ryan got a job, he would begin making the payments. Ryan was thrilled and promptly moved into the house with his girlfriend. He stopped looking for a job.

11.     They loved Nicole dearly, but recognized that she had no money sense whatsoever. Therefore, they put $350,000 into an irrevocable trust for Nicole’s benefit in August, naming Mike’s brother, Owen, as the Trustee. The trust provided that Owen could use the income and/or principal for Nicole’s benefit. Nicole could request one-half of the principal when she turned 25 and the balance at 30. Owen could deny a request for distribution if he thought that Nicole was not sufficiently mature to manage the money or if she was involved with drugs or alcohol. If Nicole died before she received distribution of the entire trust, the balance was to be distributed to her children, if any, and if none, to Lisa and Ryan equally. Michael and Owen are very close.

12.     In September. They purchased an apartment building (12 units) for $2,400,000. They transferred ownership to a California limited liability company. Immediately thereafter, tey gave an undivided 1/6 interest to each of Ryan, Lisa, and Nicole. They retained an undivided ½ interest in the limited liability company (LLC).

13.     In November, they gave $200,000 to California State University, Fullerton to establish a scholarship fund in their name. The scholarship was to be awarded each year to a student studying tax or accounting. The school suggested that they might want to consult with an accountant to advise them in the management and investment of their funds.

14.     In December, Carol disclaimed any interest in the estate of her grandfather, Patrick, who died in May 2004. Her grandfather’s trust left Carol an undivided one-third interest in the family farm. The value of an undivided one-third interest was $300,000. Carol directed the trustee to give her interest to her children, Lisa, Ryan, and Nicole, equally.

Please discuss the gift tax issues presented. Please give reasons for your answers. Do not give only your unsupported answers. Please show the amount of any gift or exemption and the amount of tax due, if any. Your calculations should be organized in the form 709.
Expert:  jonacpa replied 11 years ago.

I will work something up for you this evening and post it by tomorrow.


jonacpa, Tutor
Category: Homework
Satisfied Customers: 3118
Experience: Helpful answers to math, english, grammar, and other related questions.
jonacpa and 5 other Homework Specialists are ready to help you
Customer: replied 11 years ago.
Reply to jonacpa's Post: do you think you will be able to provide a pretty accurate answer?
Customer: replied 11 years ago.
Reply to jonacpa's Post: hi, i was wondering if you will be able to post the answer by tonight? thanks.
Expert:  jonacpa replied 11 years ago.

I am working on it right now. I am on issue number 11 and should be completed shortly.


Expert:  jonacpa replied 11 years ago.

You need to spend $3 to view this post. Add Funds to your account and buy credits.
Customer: replied 11 years ago.
Reply to jonacpa's Post: Hi Jon,

I was wondering if you might be able to help me out with some tax study problems i'm having difficulty with. i need the correct answers to them in order to study for my final. i'm willing to pay a good amount for the help. let me know if you might be interested. i'm willing to pay approx. $50. let me know. thanks!
Expert:  jonacpa replied 11 years ago.

Which questions? Some of your posts have had some pretty technical issues and I am leaving for Florida in the AM. If you can tell me which questions you need answers to, I will let you know right away whether i can help or not.



Customer: replied 11 years ago.
Reply to jonacpa's Post: It's a number of Problem sets.. Below is the first problem set out of about 4 or 5. Let me know. thanks!

Assumptions: Except as otherwise stated, A starts out with nondepreciable real property (a capital asset) worth $100 (adjusted basis $40) and ends up with cash of $50 plus a 50% interest worth $50 in X, a newly organized corporation that owns the property.

In each problem, determine the following:

1.     A’s amount realized
2.     A’s gain or loss realized
3.     A’s gain or loss recognized and the character thereof
4.     A’s basis in the X stock received
5.      A’s holding period for the X stock received (tacked or not?)
6.     X’s basis in the property received
7.     X’s holding period for the property received (tacked or not?)
8.     The amount and character of X’s gain if X immediately sells the property for $100

#1) A transfers the property to X in exchange for all of X’s stock. Shortly thereafter, A sells half of his X stock to B for $50 and either
a)     The stock sale is a “separate” event from the prior incorporation transaction; or
b)     The stock sale is an integral part of the incorporation plan

Would the results be different if X made an S election? What if the basis for A’s property were $200 rather than $40?

#2) A sells a half interest in the property to B for $50. A and B then jointly transfer their property interests to X in exchange for X’s stock.

#3) A and B jointly organize X. A transfers his property to X in exchange for $50 in cash and half of X’s stock. B transfers $50 in cash to X in exchange for the other half of X’s stock.

#4) What would result in (3) above if A received $50 in five-year notes instead of cash? Assume the notes are debt and not equity.

#5) What would result in 1(a) above if A receives only “pure preferred” stock of X that is required to be redeemed in 5 years for $100?

#6) A borrows $50 from L (nonrecourse) on the security of the property. Shortly thereafter, A transfers the property to X (subject to this debt) in exchange for half of X’s stock, and B transfers $50 in cash to X in exchange for the other half of X’s stock. X subsequently uses the $50 cash to repay L.

#7) Same as (6) but the debt is recourse as to A and X does not assume it and A receives 100 shares and B receives 50 shares.

#8) A transfers $100 in uncollected customer accounts receivable (from A’s cash-basis service business) to X in exchange for half of X’s common stock plus X’s assumption of $50 of accounts payable attributable to the service business (which $50 A could have deducted upon payment in cash). B transfers $50 in cash to X in exchange for the other half of X’s stock. X uses this cash to pay off the assumed accounts payable.
Expert:  jonacpa replied 11 years ago.

I am sorry that I am not going to be able to assist you with this. I just got handed two more projects that need to be finished before I leave in the morning.


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