Sammy and Janet Taylor (ss 123- etc and 987-etc) live at 123 Woodforest Lane, Huntsville, Tx 77340. They have been married many years, and own a local CPA practice. They have two kids, Lauren (age 20) and Ned (age 22), both attending college. During 2021, they did the following: Transfer/transactions that possibly might include gifts: • Paid college expenses (50K tuition + 12K Room & Board). These amounts were given directly to Lauren and Ned to foster financial responsibility. [good luck!] Amount paid was $62,000 from Sammy’s accounts, albeit a community property account, as are virtual all the accounts/ assets (i.e., virtually all are Community property funds discussed herein). They also gave each child a new Toyota Prius, each with a purchase price of about $30,000. A bus was available to transport the kids to campus, but they did have jobs off-campus.

• Paid St. Luke’s Hospital in Houston for Greta (Lauren’s Aunt, Janet’s sister) for her kidney transplant. Greta is not dependent on the Taylors. The amount was paid by Janet’s checking and savings account for $142,000. 

• With $150K of insurance from the death of Sammy’s grandpa, Sammy purchased land in Walker County listing Sammy, Lauren, and Ned as “tenants in common” on the deed. (aside: why might he have not included Janet?) 

• Bought a Recreational Vehicle (RV) as a present for Sammy’s parents, costing $110,000, each Sammy and Janet chipping in equally. The parents happily drove off to the California area, and immediately and unfortunately - it burned up in the wildfires of 2021. 

• Both made a joint cash contribution of $10,000 for the reelection of Blowhard Bitsko, mayor of Huntsville. 

• Other technical stuff: They had created several trusts in 2008 making taxable gifts adding to exactly $ 2 million, but no gift tax was due since the AEA /unified credit at the time was $ 1 million/each. 

Prepare 2021 709 Gift returns for Sammy and Janet, who, while otherwise qualified to prepare the returns, desired you to do it for their own purposes. ALSO, I would like a brief written explanation of your logic for the handling of each of the above items, any assumptions you may have made, and if there was a problem in the methods used, what could have been done instead (for example, if there was a goof despite our intelligent CPA benefactors- not saying there was a goof). Note: They made the 2513 election to split the gifts. You may (and in fact, I encourage it) work as a group, and in fact, may file a “group” returns, but each group member’s name must be on the returns. 

You might actually want to also “read” the instructions to the 709 and also see what the “old” text has to say about it. Main hint: Look at my PowerPoint on a similar exercise.

Answer rating: 100% (QA)

1 The Taylors made the 2513 election to split the gifts They paid college expenses 50K tuition 12K Room Board for their two children Lauren and Ned Th... View the full answer