Watch the provided video before attempting the assignment. In the video, I am working a different example than the one you will work on. You should answer the question below using the following facts....

Nobles, CPA
Austin, TX
6th November, 2018.
Relevant Facts:
Cara Kolbert and Homer Luck were living together, they were pooling their funds during the past months for the purchasing of food and other household necessities. Cara bought a lottery ticket using the pooled funds. The ticket succeeded in winning $3 million as the prize money. Then they found that under the state law lottery can be prize can be given only to one recipient, Cara and Homer made a "separate ownership agreement." As per the agreement, both Cara and Homer had an equal interest in the ticket.
Specific Issues:
Does Cara need to pay gift tax on the transfe
ed interest? What is gift’s value?
Conclusions:
The gift’s value received by the inning of the lottery ticket will be $1.5 million. Cara doesn’t have to pay gift tax on the transfe
ed interest.
Support:
IRS 2503 (a) states that states that “taxable gifts” means refers to the total amount of gift made in a year after deductions from subchapter C. IRS 25.2511(a) further states that gift tax applies to any transfer made as gift both made in trust or otherwise; both direct or indirect; both real or personal as well as both tangible or intangible. Transfer of interest is considered as transfer of gift. IRC 2512 (a) states that when the gift is in the form of a property, then its value wills be the values on the day of acquisition, which is $1.5 million in this case that is 50% of $3 million. IRC 25.2511-1(h)(5), states if one party purchase a property with his money but has a joint owner as well then either party can severe his interest by gifting to the other party, which is just the case here. IRS 20.2010-1 (a) states that permit credit to estate of each decedent adjacent to the property’s value. IRS 20.2010-1 (d)(3) states that the amount of credit will be $5,000,000 for descendants of year 2011 and for descendants after 2011, the amount will be $5,000,000 multiplied by the cost-of-living.
But there is also IRS Form 5754 also states that if winning lottery is split between more than one person or in a group, then the form has to be filled up and submitted to the commission stating all the details of the person receiving the lottery and the specific amount they received. W2-G form will be prepared and separate taxation will be made based on the amount received from winning the lottery. So, the taxable amount can be divided as well between the two parties without considering it as gift.
Preparer.
Name -
Ways which led to the answer:
The relevant facts have been thoroughly followed to understand it. Then IRS was researched through to get the right pronouncements required for the case. Mainly IRS with regulation 25 was researched since all those relate to the gifts. Then the co
ect IRS as per the case study was found and has been mentioned here. Then the IRS pronouncements were tried to be understood and that understanding has been presented here. The video provided along was seen and followed to a
ive to the answer. The study materials were also used to a
ive at the answer.