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QUESTION

Sondra and Jason, a wealthy married couple, won $96 million in a 2011 Powerball drawing. They decided to share some of this new wealth immediately...

1. Sondra and Jason, a wealthy married couple, won $96 million in a 2011 Powerball drawing. They decided to share some of this new wealth immediately with some of their friends and family. They paid $1,800,000 on a new home for Sondra's parents, titling the home jointly in the parents' names; bought a condominium on Captiva Island for Jason's widowed mother for $950,000; gave $1 million to local charity that provides homes and job training for homeless families; sent $150,000 to Stanford university to be used for their nephews college tuition for his next 4 years in school; gave $500,000 each to Sondra's sister and Jason's brother for new homes; gave $750,000 to the best man at the wedding last year to defray the costs of needed kidney transplant; and finally donated $250,000 to their church to build a wedding chapel. The only taxable gift previously made by either Sondra or Jason was $200,000 gift in 2009 by Jason to the widow of an employee who had been killed in an auto accident. This gift was made prior to their marriage. Sondra and Jason elected gift splitting. Determine their separate taxable gifts and the gifts taxes they will owe after applying each of their lifetime unified credits.

2. Oscar, aged 70, and Maggie, aged 60, are married and jointly own a personal residence valued at $3,800,000. Oscar also owns stocks valued at $4,700,000; an art collection valued at $1,400,000; a retirement account valued at $900,000contributions entirely from the pretax income; $800,000 in cash; and $1,000,000 in miscellaneous assets. Oscar's will specifies that when he dies, his half of the personal residence will go to Maggie but that all his other assets will pass to his four children because Maggie has sufficient income from a trust fund she inherited from her grandfather. Oscar made no previous taxable gifts

a. What was Oscar's estate liability when he died in 2014?

b. Each of Oscars four children has three children (total of 12 grandchildren) If Oscar had begun transferring assets to his children and grandchildren in years 2010 through 2014, how much could he have removed in value from his estate over those five years through gift splitting and making annual transfers equal to the gift exclusion?

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