Jones is seriously ill and has $6 million of property that he wants to leave to his four children. He is considering making a current gift of the property (rather than leaving the property to pass through his will). Assuming any taxable transfer will be subject to the highest transfer tax rate. (Reference the 2012 tax rate schedule in Exhibit 25-1 and the Unified Credit schedule in Exhibit 25-5 to answer this problem. Omit the "tiny_mce_markerquot; sign in your response.)
1. Determine how much gift tax Jones will owe if he makes the transfers now.
2. How much estate tax under the 2012 rate schedule and unified credit will Jones save if he dies after three years, during which time the property appreciates to $6.8 million?