17. LO.4 During a social event, Muriel and Earl are discussing the home computer each recently purchased. Although the computers are identical makes and models, Muriel is surprised to learn that she paid a sales tax, while Earl did not. Comment as to why this could happen.
18. LO.4 Distinguish between an estate tax and an inheritance tax.
a. Do some states impose both? Neither?
b. Which, if either, does the Federal government impose?
19. LO.4 Jake (age 72) and Jessica (age 28) were recently married. To avoid any transfer taxes, Jake has promised to leave Jessica all of his wealth when he dies. Is Jake under some misconception about the operation of the Federal gift and estate taxes? Explain.
20. LO.4 Address the following issues:
a. What is the purpose of the unified transfer tax credit?
b. Is the same amount available for both the Federal gift tax and the estate tax? Explain.
c. Does the use of the credit for a gift affect the amount of credit available for the estate tax? Explain.
21. LO.4 Elijah and Anastasia are husband and wife who have five married children and nine minor grandchildren. For 2013, what is the maximum amount they can give to their family (including the sons- and daughters-in-law) without using any of their unified transfer tax credit?
22. LO.4 What is the difference between the Federal income tax on individuals and that imposed on corporations?