Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

You are a new manager and you were paired with this guy you do not know named Nikola Tesla for a poker tournament. He is

You are a new manager and you were paired with this guy you do not know named Nikola Tesla for a poker tournament. He is quite engaging in person even though he is an engineer, in fact, you might say he has an electrifying personality. He is pretty mad at his former boss over some patent issues and he has decided to retire. He plans to buy a house worth $1,000,000 in the state in which he retires, a new thing for him as he is used to living in hotels. 

 

His taxable portfolio of stocks and bonds of $6,000,000 generally yields this type of income per year: Interest income: $100,000, tax exempt interest income on municipal bonds from Pennsylvania of $50,000, qualified dividends of $350,000, ST capital gains of $20,000 and LT capital gains of $80,000. He also receives deferred compensation of $100,000 per year from his former employer and $36,000 of social security income as he turned 65 last year. His patents generate about $250,000 per year in royalties. Two different car companies have licensed his name; which generates about $100,000 a year in royalties as well. He will also have to take required minimum distributions from his defined contribution pension plan of $100,000 per year at age 72. 

 

Nikola is offended by the liberated women of today and never married, nor does he have children. His will splits his estate between charitable gifts and some nieces and nephews in the "Old Country" when he dies. He expects his estate to be worth $18,000,000 at his death. Nikola expects to buy about $50,000 per year of taxable goods and services, including his delivered meals. He has engaged you to help him determine in what state he should retire. He expects to select his state of residence solely on the basis of your memorandum that recommends the state with the lowest tax burden for his projected income level (It's an engineer thing.). You must analyze these three states: PA, FL, TX and write a memorandum. 

  1. A recitation facts and circumstances. State your question in the question section. 
  2. Analysis should include identification of the annual income tax, sales and use tax, and property tax burden of the lowest of the three states. You should also identify the estate/death tax burden on Nikola's death in each of those three states.
  3. Conclude memorandum with a clear statement of where Nikola should retire in the U.S.
  4. Edit memo using the "PA Writing Assessment Domains Scoring Guide".

Step by Step Solution

3.39 Rating (152 Votes )

There are 3 Steps involved in it

Step: 1

ANSWER IS MEMORANDUM TO Nikola Tesla FROM Your Name Tax Consultant DATE Date SUBJECT State Selection for Retirement Tax Considerations I FACTS AND CIR... blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Management Accounting

Authors: Leslie G. Eldenburg, Albie Brooks, Judy Oliver, Gillian Vesty, Rodney Dormer, Vijaya Murthy, Nick Pawsey

4th Edition

0730369382, 978-0730369387

More Books

Students also viewed these Databases questions