Donna Died on June 1 of the Current Year

question 104

Essay

Donna died on June 1 of the current year. The executor considers the following information when preparing her estate tax return:
• In 1997, Donna transfers title to her personal residence to her son. The residence is worth $60,000 on the transfer date. Donna continued to live alone in the residence until her death. She did not pay any rent. At her death, the residence is worth $100,000.
• In 1998, Donna created an irrevocable trust and funded it with $300,000 of assets. Donna names a bank as trustee. According to the trust agreement, all the trust income is to be paid out annually for 25 years. The trustee, however, is to decide how much income to pay each year to Donna's son and daughter. Upon termination of the trust, the assets are to be distributed equally among her two children or their estates. The trust's assets are worth $320,000 when Donna dies.
• In 1998, Donna created a revocable trust with a bank named as trustee. She named her grandchild Joe as the beneficiary for life. Upon Joe's death, the property is to be distributed equally among Joe's descendants. The trust assets are worth $300,000 when Donna dies. How much would be included in Donna's gross estate?

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Definitions:

Market Pricing

The process of determining the value of a job in the external job market by comparing it with similar jobs in other organizations.

Equity

Fair treatment and distribution of resources, or in finance, the value of an ownership interest in property, including shareholders' equity in a corporation.

Efficiency

The ability to achieve maximum productivity with minimum wasted effort or expense.

Skill Blocks

Modular and progressive units of learning or competency development designed to build upon one's abilities or mastery of specific skills.