Many years ago James and Sergio purchased property for $900,000. Although they a

Question

Many years ago James and Sergio purchased property for $900,000. Although they are listed as equal co-owners, Sergio was able to provide only $400,000 of the purchase price. James treated the additional $50,000 of his contribution to the purchase price as a gift to Sergio. If the property is worth $1,125,000 at Sergio’s death, what amount would be included in Sergio’s estate if the title to the property was tenants in common? What if the title was joint tenancy with right of survivorship? (Do not round intermediate calculations. Round your final answers to the nearest whole dollar amount.)

Amount to be included in Sergio’s estate if: Title to the property was tenants in common Title to the property were joint tenancy with right of survivorship

Explanation / Answer

Amount to be Included in Sergio's Estate if :-

Tital to the Property was Tenants in Common :-

= Property Value at Sergio's Death * Share of Sergio

= $1125000 * 1/2

= $562500

Title of the Property were joint tenancy with right of survivorship :-

= Property Value at Sergio's Death * (Amount Paid by Sergio / Amount of Property)

= $1125000 * ($400000 / $900000)

= $500000

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