Question

Carol Crow, who was divorced and resident of Georgia, died on June 1. In the decedent's safe deposit box, the executors of the estate found the following:

(1) Securities valued at $30,000 on the date of death. These were registered in her name and her son's name as joint owners. Carol and her son purchased the securities in 2004 for $10,000. Each contributed $5,000 to the purchase.

(2) Realty titles to a residence in Ohio valued at $4,550,000 and to a condominium in California valued at $9,000,000. The Ohio residence was bequeathed to her daughter under the will.

(3) Deed of transfer to an irrevocable trust of $277,250 established by Carol’s father to pay the income and principal to Carol’s children. Under the terms of the trust, Carol had the power to alter or change the beneficiaries or their proportionate interests, except that she could not name herself, her creditors or her estate (or its creditors) as beneficiary.

4) A 1978 issued deposit passbook showing $50,000 in a bank savings account in the joint names of Carol and her father. Carol’s father made the only deposit into the account in 1978. The deposit agreement specifically stated that upon the death of either Carol or her father, the survivor was entitled to the full amount of the deposit. Carol’s father died in 1985. No withdrawals were ever made from the account.

(5) A 2014 taxable gift of $7 million to an irrevocable trust to help her sister have independent income. This was the only lifetime taxable gift made by Carol.

(6) Closely held stock in Peachtree Enterprises worth $2,000,000 on date of death.

(7) Carol also left the following additional property to be distributed under her will:
IBM stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,850,000
Classic car and personal effects . . . . . . . . . . . . . . . . . . . . . . . . . . 215,000
Tax-exempt bonds . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . 200,000

(8) During the estate administration, the executors paid the following:
Payments to investment advisors and other service providers. . . $2,000,000
Administration expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55,000

(9) The executors also paid the following specific bequests:
Georgia State University (for educational purposes) . . . .. . . . . . . . . $50,000
Piedmont Baptist Church . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . 65,000

(10) Under Georgia law, the executors paid $70,000 state estate taxes.

(11) Under the terms of Carol’s will, after taking into account specific bequests, the residuary estate is left to her two grandchildren, Mutt and Jeff.

Required: Compute Carol’s Total Taxable Transfers (the estate tax base).

Answer 1

Computation of Carol's Total Taxable Transfer

S.NO.	Particulars	$
1.	Securities ($30,000 - $10,000)	20,000
2.	Realities titles to a residence in Ohio	Nil
3.	Deed of transfer to an irrevocable trust	Nil
4.	Balance in Saving Bank Account	Nil
5.	Taxable Gift to an irrevocable trust	Nil
6.	Closing held stock in Peachtree Enterprise	2,000,000
7.	Additional Property distributed under her will	Nil
	Total Taxable Transfer	2,020,0000

NOTE : (a) Transfer of property under the will of deceased person  is not taxable.

(b) Transfer of property as gift under irrevocable transfer is not taxable.