Steve Silver, a new client, owns stock in HyTeche, Inc., which recently had an initial public offering.

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Steve Silver, a new client, owns stock in HyTeche, Inc., which recently had an initial public offering. In early 2015, his stock is valued at $8 million. His only other asset is $9 million of cash. Unfortunately, he has a terminal illness and has a life expectancy of less than a year. He believes that the stock’s value will escalate to about $10 million by the time of his death. Steve is a widower and wants his daughter Sylvia to end up with the stock. He wants you to do a projection of his total transfer tax cost (gift and estate) if he gives the stock to Sylvia immediately compared with his total transfer tax cost if he leaves the stock to Sylvia under his will. He explains that Sylvia is not likely to sell the stock. Thus, the stock’s basis is a moot issue. Prepare projections for the total transfer tax cost of the gift now versus pass on at death scenarios under the assumption that he will die in late 2015 when the stock will be worth $10 million.
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Federal Taxation 2016 Comprehensive

ISBN: 9780134104379

29th Edition

Authors: Thomas R. Pope, Timothy J. Rupert, Kenneth E. Anderson

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