John D. and Rose W. Smith (SSN’s 555-12-8899 and 555-21-7788)
live at 18 Torchwood Drive, Area 51, AZ 88951. John and Rose have been married
for many years and own and operate a profitable real estate business. They have
two children, Donna (age 20) and Mickey (age 22), both of whom attend college.
During 2010, the Smith’s made the following transfers:
John paid college expenses of
$50,000 in tuition and $12,000 in room and board. To establish financial
responsibility with their kids, they gave the money directly to Donna and
Rose reimbursed Martha (Donna’s aunt)
for her kidney transplant. Martha is not the dependent of the Smith’s.
John used $150,000 in insurance
proceeds he received on the death of his grandfather to purchase land in Bad
Wolf Bay, listing title as “John, Donna, and Mickey Smith, equal tenants in
As a wedding anniversary present,
John and Rose each gave $55,000 to purchase an RV for Rose’s parents (Jackie
and Ben Tyler).
John and Rose each gave a cash
contribution of $5,000 to the reelection campaign of the Mayor of Area 51.
In creating several trusts in
2008, the Smith’s made taxable gifts of $2million. Consequently, no gift tax
was due because of the specific exemption ($1million for each donor spouse).
Prepare 2010 gift tax returns
(Form 709 for the Smith’s. As in the past, the Smith’s made the Section 2513
election to split the gifts.