Lamar Grabowski is a prosperous rancher who lives in Crawford (Cherry County), Nebraska.
Lamar is 60 years old and has been married to Elouisa (58 years old) for the past 37 years. Mildred
and Charles are Lamar and Elouisa’s adult children, ages 32 and 36, respectively. Over the years
Lamar has considered making gifts to his children. Finally, in 2007 Lamar gave $250,000 each to
Mildred and Charles. This year Lamar made the following gifts to Mildred and Charles:
Property Recipient Market Value Adjusted Basis
Cash from joint savings account Mildred Jones $1,380,000
100 acres of ranch land near Crawford Charles Grabowski 1,640,000 $125,000
In addition to these gifts, this year Lamar also made a gift of 20,000 shares of Acme Inc. stock to
State University (a qualified educational institution). The stock is listed on a national exchange
(CUSIP = 000123TP) and was valued at $800,000 on the date of the gift. Lamar purchased the
Acme stock 34 years ago for $25,000, and he inherited the ranch land from his father in 1992 when
it was valued at $125,000. Lamar’s cash gifts are made from Lamar and Elouisa’s joint savings
account, and although Elouisa is a professional accountant, she has not contributed to the joint
savings account.
Lamar filed a timely gift tax return for the 2007 gifts offsetting a portion of each gift with his
$12,000 annual exclusion and offsetting the remaining $147,640 of gift taxes with a portion of
his applicable (unified) credit. Lamar has engaged you to calculate the gift tax and prepare a
draft of the 2018 gift tax return (page 1). Lamar and Elouisa have indicated they would like to
gift-split.
Be sure to fill in a parts of the return. You MUST USE 2021 Tax rates with the 2021 Tax Forms.
