Directions
Read the scenario below carefully, and then research the tax issues . Communicate your conclusions and provide supportive analysis in the format of a tax file memo submitted as a Microsoft Word document (see the sample memo provided in the Course Documents section of the course). Remember, the conclusion section will be a clear and concise statement of your findings – usually just a few sentences per tax issue. The bulk of your work will be done in the analysis section, as this is the most important section of the memo. You should include a detailed review of the controlling laws and detail the strengths and weaknesses of both sides of the tax argument(s).
Scenario: Robert and Sandra Martin are married and always have lived in a community property state. Robert (age 88) suffers from numerous medical disorders and is frequently ill, while Sandra (age 74) is in good health. The Martins currently need $600,000 to meet living expenses, make debt payments, and pay Robert’s backlog of medical expenses. They are willing to sell any one of the following assets.
Adjusted Basis
Fair Market Value
Wren Corporation stock
$250,000
$600,000
Gull Corporation stock
750,000
600,000
Unimproved land
700,000
600,000
The stock investments are part of the Martins’ community property, while the land is Robert’s separate property that he inherited from his mother. If the land is not sold, Robert is considering making a gift of it to Sandra. Write a memo for the tax research file addressing each property and recommending a tax-effective course of action.
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