Harriet Harper Tax Return (Form 706)
Harper, age 74, died as a result of an automobile accident on June 6, 2013. At
the time of her death, Harriet lived at 1520 Marlin Drive, Clearwater, FL,
33758. She was predeceased by her husband. John W. Harper, who died in 2001.
Harriet is survived by her two adult children. Travis Harper and Hannah Baker. Information regarding
Harriet’s estate is summarized below.
established a marital deduction trust with $1 million of assets. Under the
terms of the trust, Harriet received a life estate with the remainder passing
to their children. (i.e., Travis and Hannah). To obtain a marital deduction for
John’s estate, his executor made a QTIP
election. On June 6, 2013, the trust had a value of $2 million. During 2013, the trust assets
are distributed to Travis and Hannah.
Harriet owned three insurance policies with Falcon Assurance Company-one on
her life and one on the life of each of her children. All policies
have a maturity value of $100,00; all
name Harriet or her estate as the beneficiary. As of June 6, 2013, the
policies on Travis and Hannah each had a value of $40,000.
A tract of
undeveloped land in Pinellas County (FL) was purchased by Harriet as an
investment in 2002 for $300,000. To help finance the purchase, Harriet obtained
mortgage funds from Tampa Savings and Loan. As of June 6, 2013, the land was
worth $900,000, and Harriet owed $100,000 on the mortgage.
cottages in Destin (FL) were inherited from John and worth $1 million on June
6, 2013. The cottages had value of $600,000 when John died; his original cost
vacation lodge in Union (SC) was held as joint tenants with right of
survivorship in the names of Harriet Harper, Travis Harper, and Hannah Baker.
The property was purchased in 2002 for $400,000; $200,000 was provided by
Harriet and $100,000 was furnished by each of her children. On June 6, 2013,
the lodge was worth $1 million.
Marlin Drive residence is owned by her. It had a value of $500,000 on June 6,
that fatally injured Harriet was caused by the delivery truck of a national
soft drink bottling company. Not only was the truck in disrepair, but the
driver was charged with DUI. To avoid the adverse publicity of lawsuit
involving the obvious gross negligence,
the corporate office offered to settle any claims. After careful deliberation,
Harriet’s co-executors (Travis and Hannah) signed a release. In return, the
estate received $400,000 in cash plus payment of all medical expenses. Of the
medical expenses, the doctors and hospital were paid directly by the building
company. The settlement was received by the estate before it was closed and the
Form 706 filed.
owned by Harriet as of June 6, 2013
account at Dunedin State Bank $ 17,500
Georgia bonds (interest accrued to date of death) 105,000
income tax refund receivable (for tax year 2012) 2,000
and expenses in connection with the administration of the estate include:
credit card debt and household bills
(e.g., utilities, gardener) $13,000
income tax ( January 1, 2013, to June 6, 2013) 27,000
fees and court costs
pledge to Clearwater First Methodist
Fund ( paid by the estate during its administration) 20,000
Travis and Hannah had experience in
handling their father’s estate. Harriet’s will designated them as co-executors
of her estate. The probate of the Estate of Harriet C. harper is completed
December 16, 2013. Travis and Hannah are the sole heirs.
Prepare an estate tax return
(Form 706) for Harriet, In this regard, make the following assumptions.
any request for information that is not available
deductions require a choice between the income and estate taxes (Form 706 or
form 1041) and cannot be deducted twice . Resolve all choices in favor of Form
made no taxable gifts in prior years.
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