George, a citizen of Mexico, has a sizeable estate that includes the following assets:

− A condominium in Vail, Colorado;

− A house in Mexico City;

− Cash and diamonds located in a safe deposit box in a Houston, Texas bank;

− $2 million of stock in U.S. corporations and $10 million of stock in foreign corporations, held through a brokerage firm located in New York City;

− $500,000 of publicly traded bonds issued by U.S. corporations;

− A $10 million promissory note issued by a Mexican corporation;

− A cause of action for securities fraud and related claims against a U.S. investment advisor;

− A limited partnership interest in a Cayman Islands partnership that owns, among other things, a dog track located in Florida;

− A $20 million policy on his life issued by a U.S. insurance company;

− A $5 million policy insuring the life of his wife issued by a U.S insurance company;

− Certificates of deposit and savings accounts at a bank in Miami, Florida, having a combined balance of $1 million.

a. George occasionally spends time in the United States attending to his domestic business interests and vacationing with his family. Each trip lasts only a matter of weeks, after which he returns to his home in Mexico City. George gave all of the above-described assets to his children. To what extent, if any, does he owe U.S. gift tax?

b. Same as (a), except that George retained all of his assets until his death, which occurred during a trip to the United States. Assuming all of the assets pass to his children, to what extent is George’s estate liable for U.S. estate tax?

Answer rating: 100% (QA)

a George does not owe any U S gift tax becau... View the full answer