George has an estate worth $10,000,000. Suppose George wants to gift property to his daughter Lee, in order to reduce the value of his gross estate at death. Part of his estate includes the following property:
a. An investment in real estate with FMV of $600,000 ; George’s original basis is $700,000
b. Four lake cottages with FMV of $600,000, Lee would sell immediately because she doesn’t want to manage them; George’s original basis is $150,000
c. A vacation home with FMV of $600,000 , Lee will never sell; George’s original basis is $100,000
d. An original Picasso painting worth $2,000,000 that Lee hates; George’s original basis is $400,000.
1. Which property should George gift to Lee?
2. In 2015, Jane Doe, age 75, has five (5) grown children. She has a sizeable estate and wants to begin giving monetary gifts to her children and their five (5) spouses. How much can Jane give to her children and their spouses this year?
3. If Jane Doe is married to John Doe, and they have ten children and ten grandchildren, how much can they give in annual gift tax exemptions?
4. Any gift taxes paid more than __________ years before the donor’s death remove that money from the donor’s gross estate.
5. Warren Buffett wants to make a $1,000,000 gift to his great grandson, Jimmy Buffett during his lifetime. Suppose Warren has not made any other gifts during his lifetime. After making this gift, how much does Mr. Buffett have left in his lifetime exclusion?
Suppose Mr. Buffett has already used his lifetime unified credit. How much gift tax will he have to pay after making the $1,000,000 gift?