1. Baxter Baeless (BB), now a California resident, owns a 60% interest in the Shiloh General Partnership. The Partnership only does business in California.
2. BB has a basis of $400,000 and a fair market value of $2,000,000 in the partnership. His share of partnership liabilities is $1,000,000 which are included in his $400,000 basis calculation.
3. BB is nearing retirement age, which is not very young in his profession, and has decided to give away his partnership interest on June 15th.
4. The partnership's year ends on June 30th because it has a 50% plus capital owner (NBC Corporation).
5. BB intends to give half of his interest to his son Meaningful and half to the American Red Cross.
6. BB is 84 years old and in less than robust health as a life time smoker. His net assets exclusive of his interest in the partnership exceed $18.000,000. He is single, but dating a young woman who is 30 years old, who he loves and believes loves him. He is considering marrying her.
Figure out the Following Tax Implications for BB, Meaningful, American Red Cross, The Partnership and the Government.
1) Income Tax
2) Gift Tax
3) Estate Tax
4) State Tax