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Question 1: In 2008, Jim and Maude purchase a commercial annuity. Jim furnishes 75% of the cost, and Maude provides the balance. Under the terms of the contract, Jim is to receive $48,000 per year for his life. If Jim predeceases Maude, she is to receive $36,000 per year for her life.

a. If Jim dies first when the value of the survivorship feature is $400,000, how much, if any, is included in his gross estate?

b. Would anything regarding the annuity be included in Maude's gross estate when she dies five years after Jim? Explain.

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