Question: Why do some donors consider the qualified

> P Corporation acquires all of S Corporation’s stock at the beginning of the current year in a transaction that qualifies as a Sec. 382 ownership change. P and S elect to file a consolidated tax return for the current year. At the time of the acquisition,

> P and S Corporations comprise an affiliated group that files separate tax returns. P and S had no intercompany inventory sales before the current year (Year 1). P and S use the first-in, first-out (FIFO) inventory method. During Year 1, S sells 40,000 wi

> P Corporation owns 100% of S Corporation’s stock, and S owns 100% of T Corporation’s stock. The three corporations have filed consolidated tax returns for several years. On January 1 of the current year, P’s basis for its S stock is $5 million, and S’s b

> Mark Green and his brother Michael purchased land in Orlando, Florida many years ago. At that time, they began their investing as Green Brothers Partnership with capital they obtained from placing second mortgages on their homes. Their investments have f

> P Corporation owns 100% of S Corporation’s stock, and they have filed consolidated tax returns for several years. P also has owned 49% of T Corporation’s stock for 10 years. On December 31 of the current year (Year 1), P purchases the other 51% of T’s st

> Bart, P’s sole shareholder, creates P on January 1 of Year 1. P purchases all of S1’s and S2’s stock on September 1 of Year 1, after both corporations are in operation for about six months. P, S1, and

> P Corporation acquires all of S Corporation’s stock at the close of business on December 31 of Year 1. The corporations, which file on the calendar year, begin filing a consolidated tax return for Year 2. The corporations report the fol

> Explain the conditions under which Sec. 751 has an impact on nonliquidating (current) distributions.

> P Corporation owns all the stock of S1 and S2 Corporations, and the group has filed consolidated tax returns on a calendar year basis for several years. In the current year (Year 1), S2 sells to S1 for $90,000 land S2 had purchased for $75,000. On Decemb

> P Corporation acquires all of S Corporation’s stock on January 1 of Year 2. In Year 1, the corporations were unrelated entities that filed separate returns. P and S report the following results: Ignore the Sec. 382 loss limitation that

> P Corporation owns all the stock of S Corporation, and P and S file a consolidated tax return. On January 1 of Year 2, P creates T Corporation and acquires all of its stock. P, S, and T report the following results for Years 1 through 3 (before any NOL d

> P Corporation owns all the stock of S1 and S2 Corporations. The corporations have filed consolidated tax returns since their creation in Year 1. At the close of business on July 10 of Year 3, P sells all of its S2 stock. The group reports the following r

> P and S Corporations form in Year 1, with S as P’s wholly-owned subsidiary. The corporations immediately elect to file consolidated tax returns. The group reports the following results: The group does not elect to forego any NOL carryb

> Peoria and Salem Corporations have filed consolidated tax returns for several years. For the current year, consolidated adjusted current earnings are $750,000. Consolidated preadjustment alternative minimum taxable income is $400,000. Consolidated taxabl

> Dallas and Houston Corporations comprise an affiliated group that formed at the beginning of the current year. The following items pertain to Dallas and Houston for the current year: Determine each corporation’s AMT liability if they f

> Miami and Tampa Corporations comprise a parent-subsidiary controlled group. The corporations also comprise an affiliated group that has filed separate tax returns prior to the current year. In each case for the current year, determine each corporation’s

> P, S, and T Corporations have filed consolidated tax returns for several years. P, S, and T report taxable incomes or losses (without regard to any dividends received and dividends-received deductions) of $200,000, $(70,000), and $175,000, respectively,

> Alpha and Beta Corporations comprise an affiliated group that has filed separate tax returns prior to the current year. The corporations report the following amounts for the current year: Alpha’s long-term capital gains include a $4,40

> List five advantages and five disadvantages of making an S election. Briefly explain each item.

> Mobile, Newark, and Omaha Corporations comprise an affiliated group that has filed separate tax returns prior to the current year. The corporations report the following amounts for the current year: The corporations have no intercompany transactions, no

> Topeka and Wichita Corporations have filed consolidated tax returns for several years. Topeka and Wichita report current year taxable incomes (without regard to any dividend income received, charitable contribution deduction, or dividends-received deduct

> P and S Corporations have filed consolidated tax returns for several years. The group had no intercompany inventory sales before the current year (Year 1). P and S use the first-in, first-out (FIFO) inventory method. During Year 1, S sells 50,000 widgets

> P and S Corporations have filed consolidated tax returns for several years. In the current year (Year 1), P began selling inventory items to S. P and S use the first-in, first-out (FIFO) inventory method. P’s profits on its Year 1 inventory sales to S ar

> S and B corporations are members of an affiliated group that has filed consolidated tax returns for several years. S drills a water well for B in Year 1 and charges B $5,000 for the service. S incurs $4,400 of expenses when drilling the well. B capitaliz

> P and S Corporations have filed consolidated tax returns on a calendar year basis for several years. Both corporations use the accrual method of accounting. On January 1 of the current year, S begins renting a warehouse to P for $10,000 per month. P pays

> P and S Corporations have filed consolidated tax returns on a calendar year basis for several years. Both corporations use the accrual method of accounting. On August 1 of the current year (Year 1), P loans S $250,000 on a one-year note. P charges intere

> P Corporation owns all of S Corporation’s stock. Both corporations use the accrual method of accounting, and they file a consolidated tax return. S provides cleaning services to P. In so doing, S charges P $6,000 for the services and incurs $5,000 of exp

> P owns all the stock of S1 and S2 Corporations. The corporations have filed consolidated tax returns for several years. In the current year (Year 1), S1 sells land to P for $100,000. S1 purchased the land several years earlier for $35,000. P sells the la

> P and S Corporations have filed consolidated tax returns for several years. In Year 1, P purchased land as an investment for $20,000. In Year 3, P sold the land to S for $60,000. S used the land for four years as additional parking space for its employee

> The AB Partnership purchases plastic components and assembles children’s toys. The assembly operation requires a number of special machines that are housed in a building the partnership owns. The partnership has depreciated all its property under MACRS.

> P Corporation owns all the stock of S1 and S2 Corporations, and the three corporations have filed consolidated tax returns on a calendar year basis for several years. P owns 2,400 shares of publicly traded stock it purchased several years ago for $30 per

> P Corporation owns all the stock of S and B Corporations. The three corporations have filed consolidated tax returns on a calendar year basis for several years. S owns property it had purchased for $40,000 several years ago. On August 1 of Year 1, S sell

> P, S1, and S2 Corporations have filed consolidated tax returns for several years. In the current year (Year 1), S1 sells land to S2 for $275,000. S1 purchased the land for $120,000 several years ago and has held it for possible expansion. S2 constructs a

> P Corporation acquires all the stock of S Corporation on October 15 of the current year, which is the 288th day of the year (and not a leap year). Neither corporation is affiliated with another corporation prior to the acquisition. P and S use the accrua

> P Corporation uses the calendar year as its tax year and the accrual method as its overall accounting method. S Corporation uses a fiscal year ending June 30 as its tax year and the cash method as its overall accounting method. On July 31, 2018, P acquir

> P Corporation owns all the stock of S1 and S2 Corporations. The corporations have filed calendar year, consolidated tax returns for several years. On September 15 of the current year, P sells all of S1’s stock to Michelle, an unrelated individual. What e

> Assume the same facts as in Problem C:8-32. What tax returns must the corporations file for the current year? From problem 32: P Corporation owns all of S Corporation’s stock. P and S have filed consolidated tax returns for several years. Determine wheth

> P Corporation owns all of S Corporation’s stock. P and S have filed consolidated tax returns for several years. Determine whether the affiliated group terminates in each of the following circumstances. Assume that all corporations use the calendar year a

> Pierre Corporation’s management is negotiating with Salem Corporation’s management to purchase some of Salem’s stock. Salem’s outstanding shares are as follows: Pierreâ€&

> In each of the following cases, determine the corporations that comprise an affiliated group. All corporations are includible corporations and have one class of stock unless otherwise indicated. a. P Corporation owns all the stock of S and T Corporations

> Cindy has a $4,000 basis in her partnership interest before receiving a nonliquidating (current) distribution of property having a $4,500 basis and a $6,000 FMV from the CDE Partnership. Cindy has a choice of receiving either inventory or a capital asset

> In each of the following cases, determine the corporations that comprise an affiliated group. All corporations are includible corporations and have one class of stock. a. B Corporation owns 100% of C Corporation’s stock and 90% of D Corporation’s stock.

> Bonnie, a widow, irrevocably transfers $1 million of property to a trust and names a bank as trustee. For as long as Bonnie’s daughter Carol is alive, Carol is to receive all the trust income annually. Upon Carol’s death, the property is to be distribute

> On September 1 of the current year, Mario irrevocably transfers a $100,000 whole life insurance policy on his life to Mario, Jr. as owner. On September 1, the policy’s interpolated terminal reserve is $30,000. Mario paid the most recent annual premium ($

> In the current year, Kent gives $42,000 cash to each of his eight grandchildren. His wife makes no gifts during the current year. a. What are Kent’s taxable gifts, assuming Kent and his wife do not elect gift splitting? b. How would your answer to Part

> Explain to a client the tax policy reason Congress allowed estates to make installment payments of the portion of the estate taxes attributable to closely held business interests.

> When is the S corporation’s tax return due? What extensions are available for filing the return?

> Andrew and Beth are equal partners in the AB Partnership. On December 30 of the current year, the AB Partnership agrees to liquidate Andrew’s partnership interest for a cash payment on December 30 of each of the next five years. What tax issues should An

> Determine the accuracy of the following statement: The gross estate includes a general power of appointment possessed by the decedent only if the decedent exercised the power.

> Explain to an executor an advantage and a disadvantage of electing the alternate valuation date.

> The ABC Partnership made the following current distributions in the current year. The dollar amounts listed are the amounts before considering any implications of the distribution. The land Alonzo received had been contributed by Beth two years ago when

> In what circumstances do gifts fail to qualify for the annual exclusion?

> What is the purpose of the gift tax annual exclusion?

> Assume that the properties included in Alex’s gross estate have appreciated during the six-month period immediately after his death. May Alex’s executor elect the alternate valuation date and thereby achieve a larger step-up in basis? Explain.

> Antonio would like to make a gift of a life insurance policy on his life. Explain to him what action he must take to make a completed gift.

> Does the exemption from the gift tax for direct payment of tuition encompass payments of non- relatives’ tuition? Explain.

> Which of the following classifications make a shareholder ineligible to own stock in an S corporation? a. U.S. citizen b. Domestic corporation c. Partnership where all the partners are U.S. citizens d. Estate of a deceased U.S. citizen e. Grantor tru

> Which of the following items are considered to be inventory for purposes of Sec. 751? a. Supplies b. Inventory c. Notes receivable d. Land held for investment purposes e. Lots held for resale

> Under what circumstances must the amount of the unified credit usually available be reduced (by a maximum amount of $6,000) even though the donor has never claimed any unified credit?

> Determine whether the following statement is true or false: Every donor who makes a taxable gift incurs a gift tax liability. Explain your answer.

> What was the Congressional purpose for enacting the gift-splitting provisions?

> Andrew contributed investment land having an $18,000 basis and a $22,000 FMV along with $4,000 in money to the ABC Partnership when it was formed. Two years later, the partnership distributed the investment land Andrew had contributed to Bob, another par

> Describe two ways in which the transfer tax (estate and gift tax) system is a unified system.

> Gaylord Gunnison (GG) died January 13, 2017, and his gross estate consisted of three properties—cash, land, and stock in a public company. The amount of cash on the date of his death was $2.9 million, which went into the estate. On January 13, 2017, the

> Matt Patterson died in early 2017 with a $4.5 million gross estate and no deductions other than a potential marital deduction. He bequeathed all his property to his spouse, Nancy, with the provision that, if Nancy predeceases him, the couple’s two adult

> Steve Silver, a new client, owns stock in HyTeche, Inc., which recently had an initial pub lic offering. In early 2017, his stock is valued at $8 million. His only other asset is $9 million of cash. Unfortunately, he has a terminal illness and has a life

> Arthur Zolnick died at age 84 on June 7, 2016. In March 2008, he transferred $4 million of stock to a charitable remainder annuity trust (CRAT) from which he named himself to receive $200,000 per year for life. He designated a charitable organization to

> Your firm has prepared the estate tax return (Form 706) for the Estate of Belinda Baker, a widow who died January 13, 2017. Besides substantial amounts of cash, mostly in certificates of deposit, she owned ABC stocks valued at $3.2 million, TUV stocks va

> Soon you will be meeting with a client who is considering moving to one of several other states and who currently does not have a will. You want to do some research regarding how property often passes if the decedent dies intestate (without a will). The

> Philip Seymour Hoffman died in February 2014, survived by three children (Cooper, Tallulah, and Willa) and their mother Marianne O’Donnell. His estate was estimated to have a net value of $35 million. Perform a Google search using the words “Philip Seymo

> George Tanner died October 2, 2016, survived by his son Thomas and his daughter Gigi Tanner Stewart and her children, Sam and Cindy. George was the sole stockholder of Tanner, Inc., a C corporation. Gigi served as president of Tanner from its inception u

> Sam and Taylor, residents of New Jersey, entered into a domestic partnership in New Jersey in October 2004. However, they never obtained a marriage license. Sam died in March 2017, survived by Taylor. Sam’s gross estate totals $10.2 million, he owed debt

> Three years ago, Mario joined the MN Partnership by contributing land with a $10,000 basis and an $18,000 FMV. On January 15 of the current year, Mario has a basis in his partnership interest of $20,000, and none of his precontribution gain has been reco

> In May 2008, Jasper Mason died, survived by his spouse Amber Mason and four adult children. His gross estate was valued at $3 million, and he had Sec. 2053 deductions of $120,000. His will left the personal residence on which the mortgage had been paid o

> Joseph Jernigan died in 2017 with a taxable estate of $4.1 million. He was survived by his spouse Josephine and several children. He made taxable gifts of $100,000 in 1974 and $650,000 in 2000. The property given in 1974 was valued at $425,000 when he di

> Bess, a widow, died in October 2017. Her gross estate, which totaled $7 million, included a $100,000 life insurance policy on her life that she gave away in 2015. The taxable gift that arose from giving away the policy was $15,000. In December 2014, Bess

> Sam Snider died February 14, 2016, survived by his spouse Janet and several children. Sam had not made any taxable gifts. Sam’s gross estate was $7 million. In each of the following independent situations, indicate the amount of Sam’s basic exclusion amo

> Assume the same facts as in Problem C:13-48 and that before Yuji’s death in 2017 his wife already owned property valued at $300,000. Assume that each asset owned by each spouse increased 8% in value by the surviving spouse’s date of death later in 2017 a

> Assume the same facts as in Problem C:13-47 except that 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

> Refer to Problem C:13-45. What is the net addition to Joy’s taxable estate with respect to the insurance policies if all the property passing under Joy’s will was left to Joy’s son? From problem 45: J

> Joy died on November 5, 2017. Soon after Joy’s death, the executor discovered the following insurance policies on Joy’s life. Joy transferred ownership of policies 757 and 848 to her son in 2009. She gave ownership of

> Tai was the sole income beneficiary for life of each of the trusts described below. For each trust, indicate whether and why it was includible in Tai’s gross estate. a. A trust created under the will of Tai’s mother, who died in 1996. Upon Tai’s death,

> Maria died two years after her retirement. At the time of her death at age 67, she was covered by the two annuities listed below. • An annuity purchased by Maria’s father providing benefits to Maria upon her attaining age 65. Upon Maria’s death, surviv

> Complete the chart for each of the following independent distributions. Assume that all distributions are nonliquidating and pro rata to the partners, that no contributed property was distributed, that all precontribution gain has been recognized before

> John died in 2017. What amount, if any, was included in his gross estate in each of the following situations: a. In 1997, John created a revocable trust, funded it with $400,000 of assets, and named a bank as trustee. The trust instrument provided that

> In December 2015, Curt and Kate elected gift splitting to report $16,228,000 of gifts of stocks Curt made to Curt, Jr. Each paid gift taxes of $1,068,000 by spending his or her own funds. Kate died in January 2017 and was survived by Curt. Her only taxab

> In December 2015, Jody transferred stock having an $8,114,000 FMV to her daughter Joan. Jody paid $1,068,000 ($3,185,800 - $2,117,800) of gift taxes on this transfer. When Jody died in January 2017, the stock was valued at $9 million. Jody made no other

> Val died on May 13, 2017. On July 3, 2015, she gave a $400,000 life insurance policy on her own life to son Ray. Because the value of the policy was relatively low, the transfer did not cause any gift tax to be payable. a. What amount was included in Va

> Elaine died on May 1, 2017. Her gross estate consisted of the following items: Elaine’s Sec. 2053 deductions totaled $200,000. She had no other deductions. a. What percentage of Elaine’s federal estate taxes can be p

> Jeung Hong, a widower, died in March 2017. His gross estate was $6.5 million and, at the time of his death, he owed debts of $60,000. His will made a bequest of $200,000 to his undergraduate alma mater and left the rest of his property to his children. H

> Assume the same facts as in Problem C:13-29 except that Annie’s will leaves all her property to a QTIP trust for Dave for life with the remainder to their children. What tax issues should Dave James and the estate’s executor consider with respect to the

> Annie James died early in 2017. All her property passed subject to her will, which provides that her surviving husband, Dave James, is to receive all the property outright. Her will further states that any property Dave disclaims will pass instead to the

> Henry Arkin (a widower) is quite elderly and is beginning to engage in some estate planning. His goal is to reduce his transfer taxes. He is considering purchasing land with a high potential for appreciation and having it titled in the names of himself a

> From a tax standpoint, describe an advantage a very wealthy married person would achieve by disposing of an amount equal to the exemption equivalent (basic exclusion amount) to individuals other than his or her spouse?

> Lisa has a $25,000 basis in her partnership interest before receiving a current distribution of $4,000 cash and land with a $30,000 FMV and a $14,000 basis to the partnership. Assume that any distribution involving Sec. 751 property is pro rata, that any

> Refer to Problem C:13-24. Explain the negative tax considerations (if any) with respect to Bala’s making gifts of the assets that you recommended. From problem 24: Explain which of the following assets you would recommend that Bala transfer during his li

> Explain which of the following assets you would recommend that Bala transfer during his lifetime (more than one asset may be suggested): a. Life insurance on his life b. Cash c. Corporate bonds (assume interest rates are expected to rise) d. Stock in

> Assume that Larry is wealthier than Jane, his wife, and that he is likely to die before her. From an overall tax standpoint (considering transfer taxes and income taxes), is it preferable for Larry to transfer property to Jane inter vivos or at death, or

> Compare the credits available for estate tax purposes with the credits available for gift tax purposes. What differences exist?

> Judy died and was survived by her husband, Jason, who received the following interests as a result of his wife’s death. Does Judy’s estate receive a marital deduction for them? Explain. a. $400,000 of life insurance proceeds; Jason is the beneficiary;