Sarah and Clem Are Very Wealthy and Have a Program

question 100

Essay

Sarah and Clem are very wealthy and have a program of charitable and family giving.In 2015,they give $20,000 to each of their 4 grandchildren,$30,000 to Clem's brother,stock valued at $40,000 (basis = $20,000)to the Cancer society,and they buy a home valued at $525,000 for Sarah's mother.In addition,Clem puts $500,000 of his stock in the family's business into Sarah's name and sets up a revocable trust for Sarah's sister with $100,000 in bonds.If Clem made $1,900,000 and Sarah $1,300,000 in taxable gifts in 2014,their only prior-year taxable gifts,what are Clem's and Sarah's taxable gifts in 2015 if they elect gift splitting?

Understand the difference between accounting and financial break-even points.

Recognize the role of cash flow forecasting and its associated risks in project evaluation.

Understand the impact of operational changes on project cash flows and NPV.

Recognize that a positive base case NPV requires verification through additional risk and sensitivity analyses.

---

Definitions:

Cultural Context

The social, historical, and cultural circumstances, beliefs, and practices that surround and influence the meaning of a text, event, or behavior.

Western Approaches

A term referring to the ideologies, methodologies, or philosophies that originate from or are popular in Western societies, particularly in reference to analysis, science, and rational thinking.

Julian Rotter

A psychologist known for his work in social learning theory and the development of the concept of locus of control.

Internal Locus

A psychological perspective where an individual believes they can control their life and outcomes through their actions.