McGraw-Hill's Taxation of Business Entities 3rd Edition by Connie Weaver, Brian Spilker, Edmund Outslay, John Robinson, Ronald Worsham, Benjamin Ayers, John Barrick

Exercise 5

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:

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 $600,000. 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 2008 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 unified credit. Lamar has engaged you to calculate the gift tax and prepare a draft of the gift tax return (pages 1-3).