Sarah and Clem Are Very Wealthy and Have a Program

question 4

Essay

Sarah and Clem are very wealthy and have a program of charitable and family giving. In 2018, 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 2016, their only prior-year taxable gifts, what are Clem's and Sarah's taxable gifts in 2018 if they elect gift splitting?

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Definitions:

Explanandum

Rephrased: The subject or occurrence that an explanation is attempting to account for in research or analysis.

Outcome

In probability theory, a single, non-compound result among a range of possible results.

Event

An outcome or set of outcomes for which we want to know the probability.

Favorable Outcome

An outcome included in an event.