B as mentioned earlier there will be 1000000 included

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b) As mentioned earlier there will be $1,000,000 included in Jerome’s gross estate under § 2033 and $200,000 with be taken as a deduction under § 2053. For Tract B, there is a deduction allowed for indebtedness taken under § 2053 in the amount of $100,000. This is due to the fact the value of the interest passing to the children is reduced for the amount used to pay the mortgage. 5. a) Since interest is terminable, the decedent has given an interest in the property to another, and with the termination or failure of Wanda’s interest, the children will come into possession or enjoyment of the property, the terminable interest rule renders this income interest in property passing to surviving spouse nondeductible. If the spouse enjoys controls over the property that makes the spouse the complete owner of the property, there will be an exception to the terminable interest rule under § 2056(b)(5). With this exception, the marital deduction will be allowed for this life interest passing to a surviving spouse and the entire $500,000 will be deducted. In order to qualify for the exception to get the marital deduction in this scenario: (1)The surviving spouse must be entitled for life to all of the income from the entire interest or a specific portion of the entire interest, or to a specific portion of all the income from the entire interest. (2) The income payable to the surviving spouse must be payable annually or at more frequent intervals.
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(3) The surviving spouse must have the power to appoint the entire interest or the specific portion to either surviving spouse or spouse's estate. (4) The power in the surviving spouse must be exercisable by the spouse alone and must be exercisable in all events. (5) The entire interest or the specific portion must not be subject to a power in any other person to appoint any part to any person other than the surviving spouse. b) There are two options that can occur based on §2056(b)(5). If the requirements of §2056(b) (5) are met, the remaining value of $2,000,000 is included in her gross estate. If the requirements of §2056(b)(5) are not met, none of the transferred property would be included in Wanda’s gross estate because the interest of the spouse would expire at death under the requirements of §2033. 6. a) In this scenario when Brad chose to make the QTIP election, a marital deduction for the entire value could be claimed. The QTIP election, § 2056(b)(7)(A)(ii), provides that no part of the property is treated as passing to anyone other than the surviving spouse even though the surviving spouse has only a life interest and the remainder actually passes to others. No transfer taxes will be imposed on the surviving spouse nor the spouse’s estate on property that has been treated as qualified terminable interest property. b) All of the assets of the QTIP are treated as being passed to the surviving spouse if the requirements of § 2056(b)(7) are met. Due to the fact the estate tax was deferred when the first spouse died, all of the QTIP trust remaining when the second spouse dies, Wanda, is included in her gross estate under § 2044.
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