After Being Diagnosed with a Terminal Illness,Jude (A Widower) Makes

question 82

Essay

After being diagnosed with a terminal illness,Jude (a widower) makes gifts of all of his assets (over $6 million in value) to family members and dies shortly thereafter.Based on these facts,comment on the following assumptions.
a.Because the Federal gift tax is imposed on the donor and Jude has no assets,any gift tax that is due is avoided.
b.Because Jude died without any assets,the Federal estate tax is avoided.

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Definitions:

Bonus Depreciation

An additional amount of depreciation that can be claimed in the first year of ownership of business assets, accelerating tax benefits.

AMT Purposes

Pertains to the Alternative Minimum Tax, a parallel tax system designed to ensure that individuals and corporations with substantial exemptions or deductions pay at least a minimum amount of tax.

Long-term Contracts

Agreements that span a lengthy period, typically over one year, often related to construction or large projects.

Completed Contract Method

An accounting technique used for recognizing revenue and expenses on long-term projects only after the project is finished.