Project description
This analysis exercise offers you an opportunity to analyze the tax consequences of a gift situation.
Review the given scenario, and think about the client’s options that include: giving the money to grandchildren for education, donating a like amount to individual colleges, or purchasing stock.
Important considerations are the stock basis and the type of trust being considered. For this analysis, the use of outside resources such as the ITT Tech Virtual library and the
http://www.IRS.gov website would be valuable tools.
Your client, Karen Kross, recently married Larry Kross. Karen is age 72, quite wealthy, and in reasonably good health. To date, she has not made any taxable gifts, but Larry made taxable gifts
totaling $900,000 in 1998. Karen is considering giving each of her five college-age grandchildren approximately $34,000 of cash for them to use to pay their college expenses of tuition and room
and board for the year. In addition, she is considering giving her three younger grandchildren $3,000 each to use for orthodontic bills. Karen wants to give her daughter property valued at
$400,000. She is trying to choose between giving her daughter cash or stock with a basis of $125,000. She would like to give her son $400,000 of property also, but prefers to tie the property up
in a discretionary trust with a bank as trustee for the son for at least 15 years. An agricultural museum approached Karen about making a contribution to it and, as a result, she is contemplating
deeding her family farm to the museum but retaining a life estate in the farm.
a. Analyze the scenario. If necessary, review similar cases in the ITT Tech Virtual library or the www.IRS.gov website.
b. Prepare a memorandum to the tax partner of your firm outlining the transfer tax and income tax consequences of each option.
c. At the end of the memorandum, make appropriate recommendations based on your analysis and any outside resources you consulted.
Submission Requirements:
Please submit the completed assessment to the Week 5 assessment area as a Word attachment.
• Submit your memorandum in a Microsoft Word document.
BU317: Week 5 Gift And Estate Taxes Analysis 5.1 Gift Tax Consequences
• Font: Arial, 12 point
• Line spacing: double
• Remember to use the APA citation format if you cite any resources from the ITT Tech Virtual Library
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