Keep these key elements in mind as you explore the Week 1 materials, then address these questions:
kens uninsured automobile which was used for business purposes was damaged in an accident. at the date of the accident the fair market value was 12,000 and its adjusted basis was 9,000 after the accident the automobile appraised at 4,000 kens loss deduction is
8,000 from deduction
8,000 for deduction
4,000 from deduction
4,000 for deduction
none of the above
Kenny is considering changing his will today. He wants the new will to leave everything to Melissa. Which of the following statements is true.
Misleading question because its framed around changing his will and leaving everything to his wife Melissa. However, a “No-Contest” clause would be the correct choice if there was for something for his daughters Kati and Karli to lose if they contested the will. Therefore, does the question now change…Which of the following statements are true? In this case I believe the answer would be “C”. As a guardianship clause can be used to identify future guardians for Kenny’s son Kole. Or am I am just reading into this question to hard? I know “B” is incorrect because they are talking about a survivorship clause. “D” is incorrect because that is false.
Kenny and Melissa’s Background
Kenny, age 62, and Melissa, age 23, have been dating for about a year and a half. Kenny and Melissa met when Kenny was on a vacation in the south of France. Melissa was a beautiful French artist selling paintings at the market by Kenny’s hotel. After a month-long romance, Kenny asked Melissa to return to the United States with him. Although not a United States citizen, she has maintained residence in the United States for 15 months.
While they have no current plans to marry, they recently found out that Melissa is expecting her first child. Although no paternity tests have been conducted, both Kenny and Melissa are confident the child is Kenny’s. When they found out Melissa was pregnant, Melissa moved into the 4 bedroom home Kenny owns so they could prepare for the baby, whom they plan to name Kole. To prove to Melissa that he was serious about them being a family, Kenny gave Melissa $5,250,000 in a money market account last month. The money market account is the only asset Melissa owns. Kenny also purchased a $2,000,000 life insurance policy on his life and named Melissa as the beneficiary.
Kenny was previously married and has two children from that marriage, Kati, age 38, and Karli, age 28. Both girls are happily married and have children of their own. Kati has two children, Cody, age 3, and Kali, age 13. Karli was unable to have children of her own; therefore, she adopted a little girl, Riley, age 2, from Russia last year.
Kenny and his first wife, Liz, have been divorced for ten years and are not on speaking terms. After their marriage, Kenny was required to pay Liz alimony in the amount of $10,000 per month. When the court order expired at the end of last year, Kenny felt bad so he continues to give Liz $10,000 per month on the first of each month.
Although Kenny has high blood pressure, he is otherwise healthy. Melissa has never been married. She is in excellent health, and learned just a few days ago that they are having a baby boy, who is expected to be healthy. Kenny is retired and owns The Bungalow, a local bar and grill, while Melissa is currently unemployed. Kenny and Melissa live in a community property state.
Kenny’s mother, Carrie, also lives with him. Carrie is 82 and in failing health. She was recently diagnosed with Parkinson’s disease. While she is unable to feed or bathe herself, she is expected to live for several more years. Carrie has already spent all of her retirement assets and relies exclusively on Social Security. The only substantial asset she owns is a life insurance policy covering her life. The policy has a $100,000 death benefit and is not a modified endowment contract (MEC). The policy does not have a named beneficiary.
For estate planning purposes, Kenny estimates the following expenses at his death:
1. The last illness and funeral expenses are expected to be $100,000.
2. Estate administration expenses are estimated at $180,000.
Will
Melissa does not have a will. Kenny has written two wills in his lifetime. The first will was a statutory will executed during his marriage to Liz, and dated September 1, 1990. The second will is a handwritten will he wrote right after his divorce, but it is not dated. For the second will, Kenny did not want to seek advice from an attorney so he basically copied the first will and replaced the names. The second will is only signed by him and was not witnessed. Liz still has an executed copy of the first will and the second will is in the bottom of Kenny’s sock drawer. No one, other than Kenny, knows the second will exists.
Kenny’s Last Will and Testament drafted and executed during his marriage to Liz.
I, Kenny, being of sound mind and wishing to make proper disposition of my property in the event of my death, do declare this to be my Last Will and Testament.
1. I have been married but once, and only to Liz with whom I am presently living. Out of my marriage to Liz, two children were born, namely Kati and Karli. I have adopted no one nor has anyone adopted me.
2. I leave all assets to my wife Liz.
3. In the event that Liz predeceases me or fails to survive me for more than six (6) months from the date of my death, disclaims, or otherwise fails to accept any property bequeathed to her, I give my estate to my children.
4. In the event that any of my children should predecease me, die within six months from the date of my death, disclaim, or otherwise fail to accept any property bequeathed to him or her, then such interest will pass to the said legatee’s descendents, otherwise his or her share of all of my property of which I die possessed shall be paid equally among my surviving children.
5. I name my wife, Liz, to serve as the executor of my estate with full seizin and without bond.
6. I direct that the expenses of my last illness, funeral, and the administration of my estate shall be paid by my executor as soon as practicable after my death and allocated against the residual estate.
Kenny’s Last Will and Testament handwritten after his divorce.
I, Kenny, being of sound mind and wishing to make proper disposition of my property in the event of my death, do declare this to be my Last Will and Testament.
1. I have two children, namely Kati and Karli. I have adopted no one nor has anyone adopted me.
2. I leave all assets to my children.
3. In the event that any of my children should predecease me, die within six months from the date of my death, disclaim, or otherwise fail to accept any property bequeathed to him or her, then such interest will pass to the said legatee’s descendents, otherwise his or her share of all of my property of which I die possessed shall be paid equally among my surviving children.
4. I name my daughter Kati, to serve as the executor of my estate with full seizin and without bond.
5. I direct that the expenses of my last illness, funeral, and the administration of my estate shall be paid by my executor as soon as practicable after my death and allocated against the residual estate.
Current Year Gifts to Grandchildren
Kenny made the following gifts to his grandchildren during the current year:
Kenny had paid gift tax of $1,362,518 in 2010 for taxable gifts made of $4,892,908.57. These were his first taxable gifts.
Kenny’s Statement of Financial Position (After the Gift to Melissa)
Notes to Financial Statements:
1. Assets are stated at fair market value (rounded to even dollars).
2. Liabilities are stated at principal only (rounded to even dollars).
3. The Bungalow was valued last week for insurance purposes. The valuation includes $100,000 for the land and $1,400,000 for the business.
4. The qualified plan has Liz listed as the designated beneficiary. The Investment Portfolio is a Transfer on Death (TOD) account with Kati and Karli as the listed beneficiaries.
5. The adjusted basis of the personal residence is $200,000.
6. Kenny received the vacation property as a gift from his grandfather, Grover. Grover purchased the vacation property for $10,000 and the FMV of the property at the date of transfer was $30,000. The FMV when Grover died was $60,000. The annual exclusion did not apply to the transfer and the gift tax paid was $14,700.
7. The boat is owned joint tenancy with rights of survivorship with Liz. They each contributed 50% of the purchase price. The Statement of Financial Position only reflects Kenny’s interest.
8. Kenny’s state does not have any statutes that invalidate bequests or beneficiary designations to prior spouses.
9. This statement is prepared after all the gifts were made, including the one to Melissa, and the gift tax has been paid for the 2010 gifts.
Questions:
1) Based on the information on the clients above, what recommendations, if any, would you make? Explain.
Kennth may could feel the pressure as he walked into the executive boardroom with his briefcase containing the data and slides.Pertaining to his latest proposalThe last couple of years had not been very good for him.Two of the projects that the he had recommanded for ivestment ended up having to be abandoned and one that he hadturned for one of the firms main competitor, kenneth knew that this was ging to be a long meeting
Kenneth Brown is the principal owner of Brown Oil, Inc. After quitting his university teaching job. Ken has been able to increase his annual salary by a factor of over 100. At the present time. Ken is forced to consider purchasing some more equipment for Brown Oil because of competition. His alternatives are shown in the following table: Equipment Favorable UnfavorableMarket Market$ $Sub 100 300,000 -200,000Oiler J 250,000 -100,000Texan 75,000 – 18,000For example, if Ken purchase a Sub 100 and if there is a favorable market, he will realize a profit of $300,000. On the other hand, if the market is unfavorable, Ken will suffer a loss of $200,000. But Ken has always been a very optimistic decision maker.a. What type of decision is Ken facing?b. What decision criterion should he use?c. What alternative is best?The Lubricnat is an expensive oil newsletter to which many oil giants subscribe, including Ken Brown (see the above problem for details). In the last issue, the letter described how the demand for oil products would be extremely high. Apparently, the American consumer will continue to use oil products even if the price of these products doubles.Indeed, one of the articles in the Lubricant states that the chance of a favorable market for oil products was 70%, while the chance of an unfavorable market was only 30%. Ken would like to use these probabilities in determining the best decision.a. What decision model should be used?b. What is the optimal decision?c. Ken believes that the $300,000 figure for the Sub 100 with a favorable market is too high. How much lower would this figure have to be for Ken to change his decision made in part B?Today’s Electronics specializes in manfactoring modern electronic components. It also builds the equipment that produces the components. Phyllis Weinberger, who is responsible for advising the president of Today’s Electronics on electronic manufacturing equipment , has developed the following table concerning a proposed facility:PROFIT ($)STRONG FAIR POORLarge facility 550,000 110,000 -110,000Meduim-sizedfacility 300,000 129,000 -100,000No facility 0 0 0a. Develop an opportunity loss table.b. What is the minimax regret decision?Megley Cheese Company is a small manufacturer of several defferent cheese products. One of the products is a cheese products. One of the products is a cheese spread that is sold to retail outlets. Jason Megley must decide how many cases of cheese spread to manufacture each month. The probability that the demand will be six cases is 0.1, for 7 cases is 0.3, for 8 cases is 0.5, and for 9 cases is 0.1. The cost of every case is $95. Unfortunately, any cases not sold by the end of the month are of no value, due to spoilage. How many cases of cheese should Jason manufacture each month?
Kenneth Brown is the principal owner of Brown oil inc, after quitting his university teaching job,ken has been able to increase his annual salary by a factor of over 100. at the present time, ken…
Kendra is a self-employed taxpayer working exclusively from her home office. Before the home office deduction, Kendra has $5,000 of net income. Her allocable home expenses are $10,000 in total. How are the home office expenses treated on her current year tax return?
Kendra has $1.75 in dimes and nickels. If she has 2 times as many dimes as nickels, how many of each coin does she have?
Kendra Gorman capital as of December 31, 2014, assuming that assets increased by 225,000 and assuming that assets decreased by 300,000 and liabilities by 90,000 during 2014
Kendra Gorman, capital, as of December 31, 2013= $775000b. Kendra Gorman, capital, as of December 31, 2014, assuming that assetsincreased by $225,000 and liabilities increased by $110,000 during…
Kevin Green was 16 years old when he purchased a Camaro automobile from Star Chevrolet. Kevin paid $4,642.50 for the car. Star Chevrolet conveyed the title to the car to Kevin in Kevin’s name. The question of Kevin’s age was never raised or discussed during the transaction. Kevin later discovered that the front end of the frame was bent, and that the car contained a different engine than the one that should have been in the automobile. Major engine problems developed thereafter. The vehicle was later destroyed in an accident. Kevin now wants to disaffirm the contract and demands that Star Chevrolet return his money.A. On what grounds may Kevin Green be able to disaffirm the contract?B. Explain whether Star Chevrolet must return the purchase money to Kevin Green, even though the car is now destroyed.
Hi there! Click one of our representatives below and we will get back to you as soon as possible.