Question

You are a practicing CPA at Gibbons, Johnson & Tannun, LLP. You recently received a new medium-sized client, ABI, Inc., a construction company that builds and renovates office buildings. Since the tornado went through your town, ABI, Inc., has had more projects than it can handle. ABI’s gross revenues for 2011 were $12 million dollars, up from $150,000 in 2010. Alex expects the revenues to grow by 30% for the next three years because cleanup of the devastating tornado will take that long. You prepared ABI’s taxes in March of this year and Alex Lee, owner of ABI, Inc., has contacted you again for your advice. Jackson Lee, Alex’s oldest son, would like money to start a business and has said that this is a good avenue to avoid paying estate taxes after his father’s death. Alex’s wife died last year and he has not given any money to his children in the past.
Alex Lee has contacted you for your advice regarding estate planning. His business has increased significantly this year, as has his personal wealth, and his three children (and eight grandchildren) all are asking him for money. Alex is looking for your guidance.
In a 3-4 page (12-pt, double spaced) memo to Alex Lee, explain the following in terms that he will understand:
Explain the elements of the estate tax formula.
Describe the interplay between gift and estate taxes.
Describe strategies to minimize estate taxes.
Explain the generation-skipping transfer tax and its relationship to gift and estate taxes.
Give Alex advice on whether he should give his son, Jackson, money to start a business.



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  • CreatedAugust 05, 2013
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