In 2013​, Meg​, a​ widow, engages in the following transactions. Only two of the transactions are taxable gifts.

a. Meg names Lois the beneficiary of a $130,000 life insurance policy on Meg’s life. The beneficiary designation is not irrevocable. ($0 amount of completed gift)

b. Meg deposits $60,000 cash into a checking account in the joint names of herself and Joe, who deposits nothing to the account. Later that year, Joe withdraws $11,000 from the account. ($11,000 amount of completed gift)

c. Meg pays $32,000 of nephew Norton’s medical expenses directly to County Hospital. ($0 amount of completed gift)

d. Meg transfers the title to land valued at $95,000 to Keira. ($95,000 amount of completed gift)

Prior Gifts:

1974 $700,000

1988 $1,050,000

​First, compute the cumulative taxable gifts.

Items (select all that apply, leave those that don’t blank)

1974 taxable gifts

1998 taxable gifts

2013 taxable gifts

exclusion amount

gift tax rate

unified credit available

Cumulative taxable gifts: ________

Select the​ labels, then enter the amounts and compute Meg​’s gift tax liability with respect to 2013 gifts.

Tax at current rates on the cumulative taxable gifts

Minus: Tax at current rates on the cumulative taxable gifts through prior period

Gross tax on taxable gifts made in the current year

Minus: Unified credit available

Tax liability

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When Yuji died in March 2013​, his gross estate was valued at $8 million. The marginal estate tax rate exceeded his​ estate’s marginal income tax rate because the estate collected only about $8,000 of income. Yuji willed his spouse $1.1million. His taxable estate​ (before marital​ deduction) was comprised of the​ following:

Gross estate

$8,000,000

Debts

(300,000)

Administration expenses

(120,000)

Funeral expenses

(12,000)

Charitable contribution to church

(300,000)

Assume Yuji​’s will also provided for setting up a trust to be funded with $400,000 of property with a bank named as trustee. His wife is to receive all the trust income semiannually for​ life, and upon her death the trust assets are to be distributed equally among Yuji​’s children and grandchildren.

a.    What was the amount of Yuji​’s taxable​ estate? Provide two possible answers.

With (Select one) Election Without Election

Gift Splitting

QTIP

Sec 6166

(Select One)

Adjusted taxable gifts

Gift taxes

Marital deduction

Taxable estate before marital deduction $________ $________

Minus: (select one)

Adjusted taxable gifts

Gift taxes

Marital deduction

Taxable estate before marital deduction $________ $________

Taxable Estate $________ $________

b. Assume Yuji​’s widow died in December 2013. With respect to Yuji​’s former​ assets, which items will be included in the​ widow’s gross​ estate? Provide two possible​ answers, but you need not indicate amounts.

With Election $ ________

Without Election$ ________ 

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