6 Solutions Manual for Taxation for Decision MakersDuring the current year, Cherie gives $30,000 cash to her daughter, Helen, and a remainder interest in investment land to her sister, Silvia. The remainder interest is valued at $40,000. In the current year, John, Cherie’s husband, also gives Dan $18,000 in marketable securities. What is the total amount of the annual gift tax exclusions available to Cherie and John for the current year if they elect gift splitting? Solution:$44,000 total gift exclusions = $26,000 (2 x $13,000) for $30,000 cash gift + $18,000 (2 x $9,000) for gift of marketable securities. The remainder interest is not eligible for the annual exclusion. a. A trust is established for the donor's 8-year-old daughter. The trustee can decide how much income to pay the daughter each year. At age 21, the daughter will receive all of the accumulated income and principal. b. A trust is established by transferring $10,000 each year for each of three beneficiaries who are given 30 days after receiving notice of the transfer to demand payment of the $10,000. c. All rights to a life insurance policy are given to the donor's son. Solution:a. This is a future interest, but it is eligible for the annual gift exclusion as a Section 2503(c) minor’s trust. b. Present interest for the $10,000 transferred each year. c. Present interest equal to the cost of a comparable policy at that date. 25. Present vs. Future Interest Determine whether each of the following situations involves the transfer of a present interest or a future interest. 26. Gift Planning On January 15 of the current year, Eileen, age 24, receives stock worth $26,000 as a gift from her parents. Her parents jointly purchased the stock six years ago for $12,000. During the year, Eileen receives $2,100 dividend income on the stock. In December, she sells the stock for $39,000. a. Assuming this is Eileen's only income for the year, and her parents are in the 35 percent marginal tax bracket, how much income tax does the family save as a result of this gift? b. Are there any transfer taxes as a result of this gift? Explain. Solution:a. $4,365 tax savings. For 2011, a zero tax rate applies to dividend income and long-term capital gains for individuals in the 10% or 15% marginal tax brackets; for single individuals that would include taxpayers with taxable income of less than $34,500 for 2011. Eileen has $2,100 dividend income and a long-term capital gain of $27,000 ($39,000 - $12,000 basis) resulting in $29,100 gross income.