Reference no: EM133162280
Questions -
Q1. Barbara, age 50, was the named beneficiary on the IRA of her husband, Charlie, age 70, who just died. The IRA had an account balance of $4,000,000. Barbara is a successful influencer and nonprofit executive with a high annual income. How should she treat her husband's IRA and why? Barbara, age 50, was the named beneficiary on the IRA of her mother, Debby, who just died. The IRA had an account balance of $4,000,000. What is the key difference regarding when Barbara must receive distributions from this IRA, compared to her late husband's?
Q2. Emma has set up a GRAT. She funded the trust with $15 million of securities. It will pay her an annuity of $2 million per year for 7 years, with the remainder then going to her daughter. Assume the appropriate IRS Section 7520 rate is 1 percent, and the annuity discount factor from the IRS tables is 6.7282.
a. What is the present value of the stream of annuities for Emma?
b. What is the present value of the remainder interest?
c. What are the gift tax consequences of this GRAT?
d. What do Emma and her daughter gain from doing this, that is, what is the purpose of using the GRAT?
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