Peter purchased Whiteacre, commercial real estate, 20 years ago for $300,000. Three years ago, when the local property tax appraisal on it was $1,250,000, Peter gave Whiteacre to his daughter, Deanna. Deanna died this year. Two months before her death, Bert offered to purchase Whiteacre for $3,000,000, but Deanna refused to sell. Five months after Deanna's death, chemical waste from a manufacturing business that pre-dated Peter's purchase was discovered on the property. Two years after Deanna's death, Whiteacre was distributed to her sister, Sally, who sold it for $500,000. What is the value of Whiteacre for gift and estate tax purposes? How would you establish that value in an IRS audit or at trial?
Peter purchased Whiteacre, commercial real estate, 20 years ago for $300,000. Three years ago, when the local property tax appraisal on it was $1,250,000, Peter gave Whiteacre to his daughter, Deanna. Deanna died this year. Two months before her death, Bert offered to purchase Whiteacre for $3,000,000, but Deanna refused to sell. Five months after Deanna's death, chemical waste from a manufacturing business that pre-dated Peter's purchase was discovered on the property. Two years after Deanna's death, Whiteacre was distributed to her sister, Sally, who sold it for $500,000. What is the value of Whiteacre for gift and estate tax purposes? How would you establish that value in an IRS audit or at trial?
Financial Accounting Intro Concepts Meth/Uses
14th Edition
ISBN:9781285595047
Author:Weil
Publisher:Weil
ChapterA: Appendix - Time Value Of Cash Flows: Compound Interest Concepts And Applications
Section: Chapter Questions
Problem 32P
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Transcribed Image Text:Peter purchased Whiteacre, commercial real estate,
20 years ago for $300,000.
Three years ago, when the local property tax
appraisal on it was $1,250,000,
Peter gave Whiteacre to his daughter, Deanna.
Deanna died this year. Two
months before her death, Bert offered to purchase
Whiteacre for $3,000,000, but
Deanna refused to sell. Five months after Deanna's
death, chemical waste from
a manufacturing business that pre-dated Peter's
purchase was discovered on the
property. Two years after Deanna's death, Whiteacre
was distributed to her
sister, Sally, who sold it for $500,000. What is the
value of Whiteacre for gift
and estate tax purposes? How would you establish
that value in an IRS audit or
at trial?
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