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Question;2408. CHAPTER;19?FAMILY TAX PLANNING Question ES #7;In arriving at the value of stock in a closely held business, the IRS;frequently imputes goodwill. Comment on how the following independent factors would;affect the determination of goodwill.;a.;Past profits;include a large nonoperating gain.;b.;Shareholder-employees;have not been receiving adequate compensation for their services.;c.;The;shareholders have been financing corporate operations with interest-free;loans.;2409. CHAPTER;19?FAMILY TAX PLANNING Question ES #8;The quantity of stock that a decedent owns in a closely held corporation can;have an effect on its valuation. Explain this statement.;2410. CHAPTER;19?FAMILY TAX PLANNING Question ES #9;At the time of his death, Al owned a majority interest in Macaw Corporation, a closely;held holding company. Macaw?s major asset is stock in ABC Grocers, a regional;supermarket chain. The ABC stock has a per share basis to Macaw of $50 and is;currently worth $2,000. In what manner, if any, may these facts have a bearing;on the value of the Macaw stock included in Al?s gross estate?;2411. CHAPTER;19?FAMILY TAX PLANNING Question ES #10;A well-known artist dies and among her assets are a large number of her;paintings. What approach might be taken to lower the value of her estate?;2412. CHAPTER;19?FAMILY TAX PLANNING Question ES #11;Zane makes a gift of stock in Cerulean Company to family members. Cerulean is a;closely held corporation that is not traded on any exchange. To hedge on the;value used for gift tax purposes, Zane also donates some of the stock to a;qualified charity. Explain the advantage of this approach..;2413. CHAPTER;19?FAMILY TAX PLANNING Question ES #12;Clancy and Maureen are husband and wife and have always lived in a community;property state. When Clancy learns that he is terminally ill, he gives to;Maureen all of his share of the community investments that have declined in;value. Why?.;2414. CHAPTER;19?FAMILY TAX PLANNING Question ES #13;Even though it results in more estate tax liability, the executor of an estate;uses date of death value (rather than ? 2032 alternate valuation date).;a.;Why?;b.;Would it;matter if community property is involved?;2415. CHAPTER;19?FAMILY TAX PLANNING Question ES #14;Robert and Kristen are husband and wife. Ten years ago, they purchased stock;for $500,000. Kristen dies first in 2011 when the property is worth $1,000,000.;Assuming the property passes to Robert, what is his income tax basis under the;following ownership assumptions?;a.;A tenancy by;the entirety is involved.;b.;Community;property is involved.;c.;Why are the;results different?;2416. CHAPTER;19?FAMILY TAX PLANNING Question ES #15;Regarding the effects of ? 1014(e) (i.e., step-up in basis and the one-year;rule), comment on the following variables.;a.;On the date;of the gift, the property given is worth less than the donor?s adjusted;basis.;b.;Under the;donee?s will, the property passes to someone other than the donor or donor?s;spouse.;2417. CHAPTER;19?FAMILY TAX PLANNING Question ES #16;In connection with a traditional IRA that is transferred at death, comment on;the tax implications of each of the following.;a.;The;beneficiary does nothing, and a distribution occurs.;b.;The;beneficiary retitles the IRA as a ?retirement IRA.?;c.;The;additional tax advantages enjoyed when the beneficiary is the surviving;spouse.;2418. CHAPTER;19?FAMILY TAX PLANNING Question ES #17;Warren sells property that he inherited five years ago from his mother;Candice. Warren believes that the property was significantly undervalued when;it was listed on the estate tax return (i.e., Form 706) filed for Candice?s;estate. For income tax purposes, can Warren deviate from this value? Explain.;2419. CHAPTER;19?FAMILY TAX PLANNING Question ES #18;One of the objectives of establishing a program of lifetime giving is to;transfer assets that are likely to appreciate in value. Examples include life;insurance policies, valuable collections (e.g., art works), vacation homes, and;undeveloped real estate. However, such gifts could cause economic problems for;certain donees. Explain why.;2420. CHAPTER;19?FAMILY TAX PLANNING Question ES #19;Giselle, a widow, has an extensive investment portfolio that has appreciated in;value. Starting in 2009, she initiates a policy of making annual gifts of;securities to her grandchildren who are attending college. Evaluate Giselle?s;policy in terms of the;a.;Federal gift;and estate taxes.;b.;Federal;income tax.;2421. CHAPTER;19?FAMILY TAX PLANNING Question ES #20;In terms of future estate tax (and death tax) savings, there are numerous;advantages to making lifetime transfers. In this connection, comment on each of;the following.;a.;Avoiding the;tax on future appreciation.;b.;Preparing;for the special use valuation method ? 2032A.;c.;The annual;exclusions utilized as to gifts.;d.;Payment of;expenses prior to death.;2422. CHAPTER;19?FAMILY TAX PLANNING Question ES #21;In making a choice as to which assets to use in carrying out a program of;lifetime giving, comment on each of the following assets.;a.;U.S. savings;bonds.;b.;Installment;notes receivable.;c.;Property;subject to recapture of depreciation.;2423. CHAPTER;19?FAMILY TAX PLANNING Question ES #22;In making a choice as to which assets to use in carrying out a program of;lifetime giving, comment on the use of each of the following assets.;a.;Assets that;have declined in value.;b.;Land that;has appreciated in value.;c.;Life;insurance policies.;d.;Out-of-state;realty.;2424. CHAPTER;19?FAMILY TAX PLANNING Question ES #23;Describe the various tax advantages that are available from donating a;conservation easement to charity.;2425. CHAPTER;19?FAMILY TAX PLANNING Question ES #24;What is the rationale for the deferral;and the equalization approaches to;the marital deduction?;2426. CHAPTER;19?FAMILY TAX PLANNING Question ES #25;Brooke wants to donate a parcel of land (basis of $50,000, fair market value of;$200,000) to her church, which it plans to use for a new parsonage. However;since Brooke wants to recover her capital investment, she plans to sell the;property to the church for $50,000. Comment on the tax consequences of this;proposed sale.;2427. CHAPTER;19?FAMILY TAX PLANNING Question ES #26;How can a disclaimer by an heir increase the charitable deduction allowed a;decedent? Is such a disclaimer always wise? Explain.;2428. CHAPTER;19?FAMILY TAX PLANNING Question ES #27;In each of the following independent;situations, describe the effect of the disclaimer procedure on Ray?s taxable estate. In this regard, advise;as to how much should be disclaimed, by whom, and whether a disclaimer should;be made, for the death in 2011.;a.;Ray?s will;leaves $6,000,000 to his adult son and the remainder ($500,000) to Amy (Ray?s;surviving wife).;b.;Ray?s will;leaves $7,000,000 to Amy (Ray?s surviving wife) and the remainder;($3,000,000) to his adult son.;c.;Ray?s will;leaves $6,000,000 to Amy (Ray?s surviving spouse) and the remainder;($500,000) to a qualified charity.;2429. CHAPTER;19?FAMILY TAX PLANNING Question ES #28;What are the advantages of ? 6166 (extension of time when the estate consists;largely of an interest in a closely held business)?;2430. CHAPTER;19?FAMILY TAX PLANNING Question ES #29;In planning for the use of ? 6166, what are several steps that can be taken to;aid the owner of a small business while he or she is alive? In this connection;consider the following.;a.;The number;of owners and the amount of ownership in the business.;b.;The;nonqualifying assets held by the owner.;c.;Aggregation;of qualifying interest.

 

Paper#59266 | Written in 18-Jul-2015

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