ONLY FOR XOON AS DISCUSSED

Discussion 1

“Gift Transfers” Please respond to the following:

  • Per the text and IRC, a gift occurs when the transfer of property is complete and the gift is valued at the date of the transfer. Imagine a scenario in which a client creates an irrevocable trust for his two (2) grandchildren to ensure college education expenses are paid. The trust agreement requires the distribution of the income from the trust directly to the college or university the grandchildren attend for tuition while they are in college and directly to the grandchildren until age twenty-five (25) after completing college. The income from the trust is distributed directly to the grandchildren until they reach age twenty-five (25), if they do not attend college. When the grandchildren celebrate their twenty-fifth (25th) birthday, the income stream distribution reverts to the client’s spouse, and the spouse receives the property upon the death of the client. Examine the gift tax consequences of the transaction based on the use of the irrevocable trust, as compared to direct payments to the grandchildren.
  • From the e-Activity and the scenario from Part 1 of this discussion, create a tax strategy which ensures that gift tax is paid on the property prior to the death of the client and that the client may use the full benefit of the gift-splitting election.

Discussion 2

“Gift Tax Planning” Please respond to the following:

  • Per the text, gift tax-planning strategies can reduce tax for estate tax-planning purposes. Estate tax planning is very important for wealthy clients. Examine one (1) tax-planning strategy that a CPA could use for lifetime giving that would reduce overall estate and gift taxes for a client.
  • Recommend at least one (1) tax-planning strategy you would use if a client was terminally ill. Provide a rationale for your recommendation.
 

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