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(Solution) - Early in May of last year Nancy Fable was diagnosed

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Early in May of last year, Nancy Fable was diagnosed with a terminal illness, and doctors gave her one more year to live. Aside from a prior year $6,000,000 gift to the city of Macon, Georgia, she had not done any other gifting. She made the following gifts within two months after being diagnosed:
Gift to the First Baptist Church . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 50,000
Gift to the Red Cross . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,000
Gift to Medcap Manufacturing Co. for a new fitness center . . . . . . . . . 100,000
Payment to Princeton University for her only nephew's tuition . . . . . . . 30,000
Gift to her only sister . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70,000
Gifts to each of her three nieces. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45,000
$320,000
In the year after being diagnosed, she made gifts of $25,000 each to her sister, three nieces, and a nephew. In the fall of that same year, Nancy passed away, leaving an estate consisting of the following at her date of death:
a. Three thousand shares of Google stock valued at $900 per share.
b. Real estate in Macon County, Georgia, valued at $3,250,000.
c. Household effects valued at $21,000.
d. Bank accounts totaling $780,000 and gold coins valued at $310,000.
e. Loan against the Macon County real estate consisting of $300,000 plus accrued interest of $7,200.
Funeral and other estate administrative expenses totaled $45,000. Property taxes of $4,000 on the real estate and income taxes of $27,000 were paid by the personal representative. In addition to the above insurance policy, Medcap Manufacturing owned an insurance policy on Nancy's life that had a death benefit of $150,000.
Subsequent to Nancy's death, but within the 6-month alternative valuation date, the following occurred:
a. Two months after Nancy's death, the Macon County land was sold for $3,050,000, and the principal amount of the real estate loan was paid off along with revised accrued interest of $8,300.
b. Three months after Nancy's death, the gold market began to collapse, and the coins were sold for $250,000.
c. ExxonMobil stock was discovered. The stock had a value of $22,000 at Nancy's date of death and was subsequently sold for $23,000.
d. The bubble burst and four months after Nancy's death, the Google stock was sold for $780 per share.
e. The household effects were distributed to family and friends and are excluded from estate assets,
f. All remaining cash, including $21,000 of interest since Nancy's date of death, was distributed as follows: one-third to immediate family and the balance to the University of Georgia to endow a chaired professorship in the Theatre Department.
Required
Determine the total amount to be paid for both estate and gift taxes over the 3-year period, beginning with the gift to the city of Macon, Georgia. Show the applicable tax for each year.

 







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This question was answered on: Jul 11, 2017

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