20 - Jones is seriously ill and has $6 million of property that he wants to leave to his four children He is considering making a current gift of the

20 - Jones is seriously ill and has $6 million of property...

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Jones is seriously ill and has $6 million of property that he wants to leave to his four children. He is considering making a current gift of the property (rather than leaving the property to pass through his will). Assuming any taxable transfer will be subject to the highest transfer tax rate.(Reference the tax rate schedule in Exhibit 25-1and the Unified Credit schedule in Exhibit 25-5to answer this problem.)a.Determine how much gift tax Jones will owe if he makes the transfers now.b.How much estate tax will Jones save if he dies after three years, during which time the property appreciates to $6.8 million?Explanation:There are two critical assumptions here. First because the top transfer tax rate applies to all transfers (currently and for future transfers), it would appear that Jones has already used his exemption equivalent. Second, Jones survives at least three years (otherwise, the gift tax on any current transfer would be included in his estate). Under these assumptions a current gift of $6 million will result in a
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