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Walter Passed Away This Year,leaving a Will Bequeathing His Wife

question 8

Essay

Walter passed away this year,leaving a will bequeathing his wife with $80,000 in cash,in addition to his stocks and land,to be held in a spousal trust on her behalf.The trust will pay her the annual income generated by the trust during her lifetime.
Additionally,Walter's 33 year old son,Steven,is to receive a building to be held in a trust until Steven reaches the age of 45.Steven will also receive the assets in his mother's (Walter's wife)trust upon her death.
The assets transferred to Walter's wife consist of land with an ACB of $100,000 and a FMV of $300,000,and stocks valued at $200,000 with a cost base of $150,000.
The building transferred to Steven has an ACB of $200,000,UCC of $180,000,and FMV of $300,000.
Required:
A)What are the immediate tax consequences (identify the income type and amount)to Walter? Show calculations.
B)What are the immediate tax consequences for the assets received by the trust for Walter's wife?

Definitions:

Commodity Contracts

Legal agreements to buy or sell a particular commodity at a predetermined price at a specified time in the future.

Certificates of Deposit

Financial instruments offered by banks that provide an interest rate premium in exchange for the customer agreeing to leave a lump-sum deposit untouched for a predetermined period of time.

General Intangibles

Assets that are non-physical in nature, such as patents, copyrights, trademarks, and goodwill.

Copyrights

A form of intellectual property law that gives the creator of an original work exclusive rights to its use and distribution, typically for a certain period.