Memorandum to the tax partner

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Reference no: EM13766442

Your client, Karen Kross, recently married Larry Kross.Karen is age 72, quite wealthy, and in reasonably good health.To date, she has not made any taxable gifts, but Larry made taxable gifts totaling $900,000 in 1998. Karen is considering giving each of her five college-age grandchildren approximately $34,000 of cash for them to use to pay their college expenses of tuition and room and board for the year. In addition, she is considering giving her three younger grandchildren $3000 each to use for orthodontic bills. Karen wants to give her daughter property valued at $400,000. She is trying to choose between giving her daughter cash or stock with basis of $125,000. She would like to give her son $400,000 of property also, but prefer to tie the property up in discretionary trust with a bank as a trustee for the son for at least 15 years. An agricultural museum approached Karen about making a contribution to it and, as a result, she is contemplating deeding her family farm to the museumbut retaining a life estate in the farm.

Required: Prepare a memorandum to the tax partner of your firm that discusses the transfer tax and income tax conequences of the proposed transactions described above. Also, make any recommendations that you deem appropriate.

Reference no: EM13766442

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