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Lady wishes to deed her residence to her daughter,

Lady wishes...
Lady wishes to deed her residence to her daughter, retaining a life estate. The lady(donor) is age 79. How do you compute the value of her life estate for gift tax purposes?
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Answered in 1 hour by:
6/4/2013
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 30,135
Experience: Taxes, Immigration, Labor Relations
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LEV :

Hi and welcome to Just Answer!
Section 7520 of the Internal Revenue Code requires the use actuarial tables for valuing life estates and remainders.
Publication 1457 provides examples.
In your case - the interest rate in June 2013 is 1.2% - see here - http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Section-7520-Interest-Rates
and Table S (1.2) shows that the factor for a life estate for a 79-year-old person is 0.09888 and a remainder
interest is 0.90112 - http://www.irs.gov/file_source/pub/irs-tege/sec_1_table_s_2009.xls
So - assuming the value of the residence is $100,000 - for gift tax purposes - the value of the gift is $100,000 x 0.90112 = $90,112.

Customer:

Thank you.

LEV :

And correspondingly - the value of the life estate would be $100,000 x 0.09888 = $9,888

Customer:

I meant to mark the highest(best) service. I will re-enter.

LEV :

Please let me know if you need any clarification this matter.
Are you able to see the answer?

Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 30,135
Experience: Taxes, Immigration, Labor Relations
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Customer reply replied 4 years ago

New Question-In June,2013 issue of Kiplinger Personal Finance it is stated on page 58,that Bronze and Silver plans qualify for Health Savings Plan accounts. Does this mean that the HSA deduction is "above the Line"? ALSO, does a TP have to have earned income to qualify for the "above the line" deduction ?

Customer reply replied 4 years ago

Did you receive my new question? See below.

Yes - I see your question. Please let me some time to read the article.
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Here is a reference to the article you mentioned
http://www.kiplinger.com/article/retirement/T027-C000-S002-new-health-insurance-options-for-early-retirees.html
http://www.chicagotribune.com/business/sns-201305241100--tms--kplngmpctnkm-b20130604-20130604,0,1011221.story

Does this mean that the HSA deduction is "above the Line"
?
To be an eligible individual and qualify for an HSA, you must meet the following requirements.
•You must be covered under a high deductible health plan (HDHP).
•You have no other health coverage (except what is permitted).
•You are not enrolled in Medicare.
•You cannot be claimed as a dependent on someone else's 2012 tax return
.
For self-only coverage HDHPs for 2013 - the minimum annual deductible is $1,250 and maximum annual deductible and other out-of-pocket expenses is $6,250.
According to the article you referenced - Bronze and Silver plans will satisfy the definition of high deductible health plan (HDHP) and satisfy HSA requirements.
These plans should be available via state exchanges starting October this year.

If you meet these requirements, you are an eligible individual. Any eligible individual can contribute to an HSA. For 2013, if you have self-only HDHP coverage, you can contribute up to $3,250.
Report all contributions to your HSA on Form 8889 and file it with your Form 1040 .
Follow the instructions for Form 8889. Report your HSA deduction on Form 1040 line 25.

Does a TP have to have earned income to qualify for the "above the line" deduction ?
As you see requirements above - having earned income is not required.
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 30,135
Experience: Taxes, Immigration, Labor Relations
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Lev
Lev
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