Solutions Manual for

Solutions Manual for Personal Finance 14 th Jack Kapoor, Les Dlabay, Robert Hughes, Melissa Hart

(All Chapters 1-19, 100% Original Verified, A+ Grade)

All Chapters Arranged Reverse 19-1

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Kapoor, Personal Finance, 14e Chapter 19 Solutions

Problems 1, 2, and 3 are based on the following scenario:

In 2021, Joshua gave $15,000 worth of XYZ stock to his son. In 2022, the XYZ shares are worth

$25,000.

• Calculating the Gift Tax. What was the gift tax in 2021?

The gift tax was zero in 2021.

LO: 19-5

Topic: Calculating the gift tax

LOD: Basic

Blooms tag: Apply

• Calculating the Gift Tax. What is the total amount removed from Joshua’s estate in 2022?

Joshua’s estate is unchanged in 2022. The shares were given to his son in 2021. Regardless if the value has gone up or down, the shares are no longer part of Joshua’s estate in 2022.

LO: 19-5

Topic: Calculating the gift tax

LOD: Basic

Blooms tag: Apply

• Calculating the Gift Tax. What will be the gift tax in 2021?

The gift tax in 2021 is zero.

LO: 19-5

Topic: Calculating the gift tax

LOD: Basic

Blooms tag: Apply

• Calculating the Gift Tax. In 2021, you gave a $15,000 cash gift to your best friend. What is the gift

tax?

There is no gift tax for up to $15,000 in 2021.

LO: 19-5

Topic: Calculating the gift tax

LOD: Basic

Blooms tag: Apply

• / 4

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Problems 5, 6, and 7 are based on the following scenario:

Barry and his wife Mary have accumulated over $4 million during their 45 years of marriage. They have three children and five grandchildren.

• Calculating the Gift Tax. How much money can Barry and Mary gift to their children in 2021 without

any gift tax liability?

$30,000 × 3 children = $90,000 (Each can gift $15,000)

LO: 19-5

Topic: Calculating the Gift Tax

LOD: Basic

Blooms tag: Apply

• Calculating the Gift Tax. How much money can Barry and Mary gift to their grandchildren?

$30,000 × 5 grandchildren = $150,000

LO: 19-5

Topic: Calculating the Gift Tax

LOD: Basic

Blooms tag: Apply

• Calculating the Gift Tax. What is the total amount removed from Barry and Mary’s estate?

$90,000 + $150,000 = $240,000

LO: 19-5

Topic: Calculating the Gift Tax

LOD: Basic

Blooms tag: Apply

• Calculating the Estate Tax. The date of death for a widow was 2021. If the estate was valued at

$2,129,000 and the estate was taxed at 40 percent, what was the heir’s tax liability?

Value of the estate = $2,129,000 Exemption in 2021 = $11,700,000 Taxable Estate = $0 Tax @ 40 percent = $0 × 0.40 = $0

LO: 19-5

Topic: Calculating the Estate Tax

LOD: Intermediate

Blooms tag: Apply

• Calculating the Estate Tax. Joel and Rachel are both retired. Married for 50 years, they’ve

amassed an estate worth $10 million. The couple has no trusts or other types of tax-sheltered assets. 3 / 4

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If Joel or Rachel dies in 2021, how much federal estate tax would the surviving spouse have to pay, assuming that the estate is taxed at the 40 percent rate?

If Joel or Rachel dies in 2021, there will be no federal estate tax liability since there is an unlimited marital deduction for the surviving spouse.

LO: 19-5

Topic: Calculating the Estate Tax

LOD: Basic

Blooms tag: Apply

• / 4