You are an associate in a boutique tax consulting firm that specializes in the real estate industry. You have been assigned to work with a client who needs advice on the tax implications of his business holdings, which include Skyscrapers, a commercial real estate firm organized as a sole proprietorship with a fair market value of $1 billion. He is considering transferring partial ownership of the Skyscrapers to both of his children and selling a 10% interest to an unrelated third party.
Your manager has asked that you prepare a memorandum informing management of the estate and gift tax consequences of these potential transactions in addition to a cost-benefit analysis. Be sure to cite appropriate case law, statutes, and regulations in your memorandum.
Propose basic estate planning strategy (without considering trusts) applying the final project fact pattern. Consider valuation, family limited partnerships, unified credit, and annual exclusion to accomplish long-term minimization of the client’s tax liability. Cite relevant legal authority for your answer. This milestone covers Section I Parts A and B (excluding trusts).
Specifically, the following critical elements must be addressed:
A. Create an estate planning strategy, showing versatility of thought, that will minimize estate and gift tax liability over the course of the client’s life span, potentially another 30 years. Assure that as little future tax liability as possible accrues to his children.
B. Utilize family limited partnerships to accomplish long-term minimization of the client’s tax liability. Consider the mechanics of these estate planning vehicles and the appropriate authority to cite.
Guidelines for Submission: Your paper must be submitted as a 2–3-page Microsoft Word document with double spacing, 12-point Times New Roman font, one-inch margins, and at least three sources cited in APA format.