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Digiron [165]
2 years ago
13

Mr. Bailey would like to gift $515,000 (FMV) of appreciated property (basis $200,000) to his son. Mr. Bailey doesn't want to use

his liquid assets to pay the gift tax (40%). He already has gifted $11,400,000. What would you suggest?
Business
1 answer:
Oliga [24]2 years ago
7 0

Answer:

He should set a grantor retained annuity trust (GRAT).

Explanation:

Mr. Bailey would be the grantor that transfers the asset into the GRAT, but retains the right to receive annuity payments for a number of years. The IRS has set a minimum annuity corresponding to the Section 7520 rate, during the last two years the rate has varied from 2-3%. When the trust expires (pays all the annuities), the beneficiary gets the asset tax free.

Since the grantor is giving up an asset but in exchange is receiving an annuity form it, there is no applicable gift tax, it is called a zeroed-out GRAT.

This type of grant makes sense only if the grantor believes that the future value of the asset will be higher than the current value, since the annuity is based on the current value. In this case, Mr. Bailey would receive payments based on a $200,000 value, but the property's fair market value is already higher and should increase as time passes.

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2 years ago
Why does the government plan its financial expenditure framework for a period of five years?
drek231 [11]

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7 0
3 years ago
Julia wanted to test out a new product for her company. She scheduled several small group lunches and learns with internal staff
KengaRu [80]

Answer: Informational

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7 0
3 years ago
Several years ago, Grant County was sued by a former County employee for wrongful discharge. Although it was to be contested by
vovangra [49]

Answer:

d) Debit Expenses $50,000 and Claims payable $100,000; Credit Cash $150,000.

Explanation:

As for the information provided,

There was this law suit against the company from past several years. Where the lawyers already estimated that liability on the company will arise amounting $100,000.

Thus, on the provisional basis such claims of $100,000 would have been provided ideally.

Now, after final judgement the court had cleared about the claim which is $150,000.

Thus, entry to record such claim of $150,000 will be:

Expenses A/c Dr.               $50,000

Claims Payable A/c Dr.      $100,000

    To Cash A/c                                             $150,000

7 0
3 years ago
The net income reported on the income statement is $58,000. However, adjusting entries have not been made at the end of the peri
nlexa [21]

Answer:

The corrected Net income = $54,500                      

Explanation:

Net income is defined as the total profits earned by an individual from a business venture. It is equal to the difference between the gross income and the expenses involved including cost of supplies and accrued salaries.

Given: net income = $58,000

Entries not made include supplies expense = $2,200 and accrued salaries = $1,300

Therefore, the corrected net income = net income - expenses = $58,000 - ($2,200 + $1,300) = $54,500    

8 0
3 years ago
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