Question: 1. Based on the guidance contained in the textbook and IRC, a gift occurs when the transfer of property is complete and the gift is valued at the date of the transfer. Imagine a scenario in which a client creates an irrevocable trust for his two (2) grandchildren to attend college. Discuss the tax issues or consequences of the generation skipping provision, and a direct gift to the grandchildren instead of creating the trust. Make at least two (2) recommendations as to how the client could minimize the tax consequences of the gift.
2. The content from the textbook indicates a gift tax-planning strategy can reduce income taxes for estate tax-planning purposes. Because estate tax planning is very important for wealthy clients, examine at least one (1) tax-planning strategy that a CPA could recommend for lifetime giving that would reduce the overall estate and gift taxes for a client.
3. Based on the information contained in the textbook, several arguments exist for the repeal of the estate tax. From the e-Activity, defend the most significant argument advanced in the repeal of the estate tax by its opponents. Justify your response.
eActivity: Go to the Tax Almanac Website, or use the Internet to research articles on the federal estate tax. Be prepared to discuss the current structure of the tax, repeal of the tax, and the reinstatement of the tax.
4. The Uniform Principal and Income Act of 2000 (Uniform Act) allows the trustee to make adjustments between the principal and income accounts as necessary under certain requirements. Examine the major reasoning for allowing such transfers by the trustee and recommend alternatives to the allowance of the adjustments. Justify your response.