Reference no: EM13488543

Mary was married on January 2d of this year to Gary Golddigger. Despite Gary's objection to Mary's philanthropic ways, he signed a consent on a timely filed form 709 to split all gifts made by Mary during the year.

For his promise to marry and provide undying love and affection, Mary agreed on January 1^st to transfer 10,000 shares of XYZ, Inc. common stock to Gary and in return Gary transferred a legally binding contract promising to marry Mary the following day. The stock was valued at $50 per share on January 1^st. Mary actually didn't get around to calling her broker until they returned from the honeymoon on January 10^th and the stock was retitled at that time when it was worth $52 per share.

Rent-free use of an office owned by Mary provided to her daughter, Charlotte, out of which she will run her campaign to run for district attorney--rental value for this year--$40,000.

Mary pays her daughter Sheila's private high school $5,000.00 to cover her expenses (in addition to the normal tuition) to travel to Florida to participate in a weeklong spring tournament for the school's field hockey team.

Mary pays $75,000 to Dr. Cutslash for plastic surgery for her ex-husband to enhance his possibilities as an aspiring soap opera actor. She has been divorced from him for 18 months.

Mary paid $50,000 to her indigent sister to be used towards a first-time home purchase.

Mary exercised a power of appointment donated to her by her Mom over a trust created by Mom in Mom's will. Mary's power over the corpus was limited to exercise in favor of Mom's children and grandchildren for their support, education, and health. Mary exercised such power in favor of her brother and appointed $15,000 of principal to such brother who used the money for his family's medical insurance that he was purchase as a result of the Affordable Care Act.

When Gary threatens to leave, Mary agrees to take out a life insurance policy on her life and names Gary as beneficiary of the $500,000 death benefit. The first year's premium, $25,000, was paid by Mary, the policy owner, this year.

Mary transfers a painting valued at $100,000 to the local art museum, a 501(c)(3) organization, with an agreement that they will jointly own the painting with each holding the right to display the painting 6 months out of the year. At her death, the museum will receive full title to the painting.

Mary bought a vacation home and titled it tenancy by the entireties with Gary. Mary paid $300,000 cash for the home.

Mary gives her son a Porsche Cayenne, fair market value 90,000 which she promised him three years ago only if he graduated Medical School, which he recently did.

Mary was recently informed by the executor of Mom's will that Mom's estate--Mom died 1 year ago--is eligible for a death benefit of $150,000 from her retirement plan. The executor was unaware of this asset until now. Mary, already filthy rich, wrote to the executor and refused this benefit. Since Mary was the only probate beneficiary, the benefit was divided by her three siblings in equal shares as required by the state intestacy statute.

Calculate Mary's taxable gifts for this year. In your answer, you should address the issues of whether such transfers are (a) gifts for gift tax purposes, (b) taxable transfers e.g. are exclusions or deductions available, and (c) eligible for gift splitting.