Question

You need to fill out Form 706 as much as possible based on the information given. You also need to attach a written explanation of why you completed the form the way you did and any relevant rules you applied.

Allison Garza died on August 1, 2022. Allison was a widow and had three children who are all adults. Allison's husband, Earl, died in 2017, but his estate did not file an estate tax return because his estate was only $1,000,000 and he left it all to Allison. Allison's SSN was 107-55-1234. Her address was 8796 Swanson Dr., Dallas, Texas 75248. She was born on July 12, 1950. Allison was very wealthy but did not leave all of her estate to her children. Her estate plan left $4M to each of her children and the remainder to her favorite charity, the Wounded Warrior Project. Allison's estate consists of the following:
Principal residence: $2,500,000
Second home: $450,000
Bank account: $200,000
Brokerage account: $15,000,000
Debts: $1,000,000 line of credit at bank, $20,000 credit card debt
Estate expenses (funeral, legal, etc.): $50,000
During her life, Allison made significant gifts to her children. She made $4,000,000 in taxable gifts during her lifetime.
Allison's executor has retained you to file the Form 706 and provide any other tax advice you deem appropriate.

Answer 1

To complete Allison Garza's federal estate tax return (Form 706), her executor must collect detailed financial information about her estate, taxable gifts, and apply relevant tax laws, exemptions, and deductions.

Step-by-step explanation:

Based on the information provided, Allison Garza's estate must file a federal estate tax return using Form 706. When completing this form, you need to gather the necessary financial information about her estate and taxable gifts made during her lifetime.

Allison's estate includes her primary residence ($2,500,000), a second home ($450,000), a bank account ($200,000), and a brokerage account ($15,000,000). The estate also has debts amounting to $1,000,000 (line of credit) and $20,000 (credit card debt), and estate expenses, including funeral and legal costs, amounting to $50,000.

The form should include Allison's personal information, such as her SSN, address, and her date of birth. Since Allison made $4,000,000 in taxable gifts throughout her lifetime, this should be reported on the form as they affect the unified credit. Moreover, considering the significant value of her estate and the lifetime gifts, Allison's executor needs to apply the relevant tax laws, including any available exemptions and deductions such as the charitable deduction for the donation to the Wounded Warrior Project.

It is important to note that, due to the United States v. Windsor ruling, which declared DOMA unconstitutional, all surviving spouses, including same-sex couples, are entitled to the same federal rights. Although this is not directly relevant to Allison's situation as she was a widow, it is a significant federal estate tax law to be aware of.