1. In 2010 Casey made a taxable gift of $5.8 million to both Stephanie and Linda (a total of $11.6 million in taxable gifts).
Calculate the amount of gift tax due this year and Casey’s unused applicable credit under the following alternatives. (Refer to
Exhibit 25-1 and
Exhibit 25-2.)
a. This year Casey made a taxable gift of $1 million to Stephanie. Casey is not married, and the 2010 gift was the only other taxable gift he has ever made. If the Gift tax due is $0,
what is the unused applicable credit?
b. This year Casey made a taxable gift of $15.8 million to Stephanie. Casey is not married, and the 2010 gift was the only other taxable gift he has ever made. If the unused applicable credit is $0,
what is the gift tax due?
c. his year Casey made a gift worth $15.8 million to Stephanie. Casey married Helen last year, and they live in a common-law state. The 2010 gift was the only other taxable gift Casey or Helen has ever made. Casey and Helen elect to gift-split this year. If both Casey and Helen’s gift tax due are $0,
what is Casey’s unused applicable credit, and what is Helen’s applicable credit?
2. Diego is a single individual who owns a life insurance policy worth $1.512 million that will be worth $8 million upon his death. This year Diego transferred the policy and all incidents of ownership to an irrevocable trust that pays income annually to Diego’s two children for 15 years and then distributes the corpus to the children in equal shares. Assume that Diego has made only one prior taxable gift of $12 million in January of 2018. (Refer to
Exhibit 25-1 and
Exhibit
25-2.)
A.
Calculate the amount of gift tax due on the transfer of the insurance policy.
B. Diego died unexpectedly this year after transferring the policy. At the time of death, Diego’s probate estate was $25 million, to be divided in equal shares between Diego’s two children. Calculate
amount of cumulative taxable transfers for estate tax purposes.
