estate_tax_solution - $600,000 6. One-half the value of...

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Topic: Estate Tax – Solution Amount included in gross estate Explanation: $25,000 1. This is insurance on another person’s life and it is not matured, so its only value is the replacement cost, or the cash value into which the policy can be converted. (George is still alive, so Marcia’s estate does not have access to $100,000, it can only receive $25,000 if it cashes in the policy on George.) $ - 0 - 2. George bought and owned the policy. $ - 0 - 3. This policy was gifted more than three years prior to Marcia’s death (eventually the marital deduction would wash it out of the estate even if it was included). $105,000 4. The value of the life insurance plus the $5,000 gift tax since the transfers were less than 3 years before death. (The estate will get credit for the $5,000 gift tax paid.) $450,000 5. Marcia originally paid 75% of the cost. In fact, Marcia made a $15,000 gift when they bought the property. Assume gift splitting was used and no tax was paid at that time.
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Unformatted text preview: $600,000 6. One-half the value of property held jointly by spouses is included regardless of who purchased the property. $200,000 7. The trust was revocable so it is still considered Marcias property when she died. $500,000 8. She retained the right to use (control) the property. $1,000,000 9. One-half the value of these jointly held assets is included in Marcias gross estate. $ - 0 - 10. Marcia does not have a general power of appointment over these assets. She can change the remainder beneficiaries only. Her rights to the income of the trust terminate at her death. If the trust had accrued income which is rightfully Marcias at her death, that amount should be distributed to her estate and included in the gross estate. $2,880,000 Total gross estate (1,600,000) Less: Marital deduction joint assets ($1,000,000 + $600,000) (50,000) Charitable deduction (25,000) Debts $1,205,000 Taxable estate...
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