3x REPOSTING: Week 7 Problem 4

THE FIRST PERSON WHO ANSWERED THIS WAS COMPLETELY WRONG on the 1st post.

One the SECOND POST- they got SECTION A correct BUT missed SECTION B

Please need help... on SECTION B ONLY QUESTION.

Hank is a single individual who possesses a life insurance policy worth $300,000 that will pay his two children a total of $800,000 upon his death. This year Hank transferred the policy and all incidents of ownership to an irrevocable trust that pays income annually to his two children for 15 years and then distributes the corpus to the children in equal shares. Assume that Hank has made only one prior taxable gift of $5 million in 2011.

a. Calculate the amount of gift tax due (if any) on the gift. AMOUNT OF GIFT TAX DUE= $ the answer is zero (CORRECT)

If Hank dies this year but after the date of the gift. At the time of his death, Hanks probate estate is $10 million and it is to be divided into equal shares between his two children.

Section B. Calculate the amount of cumulative taxable transfers for estate tax purposes. AMT OF CUMULATIVE TAXABLE TRANSFERS FOR ESTATE TAX PURPOSES= $