Hello and welcome to the session. This is Professor Farhad and the session would look at CPA simulations that deals with gross estate Now gross estate is a topic. That's usually not covered in details in college And the reason is it's either the course is not covered or you take this topic last semester And you really don't care and you really don't pay attention and what happened is when you get to the CPA exam That topic is very challenging. So hopefully By going over these simulations, it's gonna help you reinforce and learn this concepts Also, I do have a an explanation about the topic so you could click the click the description to see the Explanation so I went over I explained what gross estate is now I'm gonna be working simulations or exercises these topics are typically covered in corporate accounting Obviously the CPA exam and the enrolled agent exam as always I would like to remind you to connect with me on LinkedIn if you haven't done so YouTube, please subscribe. 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You have resources such as CPA exam questions through false multiple choice practices notes if you're looking to practice for the exam CPA exam 2000 plus 2000 plus CPA Questions so I strongly suggest you Give it a look So let's take a look at the estate formula formula that we looked at in the prior session And this is the estate formula basically we start with the fair market of gross estate Which I called line one if you want to learn about this go to the prior session It's listed in the description and so the exercises will be about this topic now in the next session I would look at line two and basically once you go through line one and line two the rest is basically Computation so after the session I would look at expenses losses and deduction when it comes to gross when it comes to gross estate So that's what I would do next so to illustrate the concepts The best way is to look at Exercises or what actually they are exercises are actually CPA simulations So let's take a look at the simulation and you might be asking how can you call an exercise the CPA simulation? That's exactly what a CPA simulation is. It's an exercise that you would see in college Sometimes it's it's listed exactly as it is on the screen Sometime what they do is they will give you exhibits rather than giving you the information They they would give you exhibit and you have to take the information out of the exhibit So I will give you a few examples, but I can't keep giving you the examples because it will go forever At the time of his death this year on September 4th Canis owned the following assets for example rather than telling you he died September 4th I can give you a death certificate. That will be an exhibit And when he died he had city of Boston Bonds the fair market value 2.5 million rather than giving you this information I can show you I can show you Kenneth the brokerage account and The date of death. What was the fair market value that and I'll can give you a whole sheet That's very complicated, but basically it boils down to He owned city of Boston Bonds and the valued at 2.5 million same thing with the stocks and Brown corporation 900,000 now I can give you those both of these information on the same brokerage account For example, he held those accounts with Vanguard or with fidelity Okay, and that's all what they are now What's given to you here or I can give you three page exhibit to show you this information? Promissory note issue by brand Kenneth's son 600,000. It seems he was lending his son 600,000 I can also give you an agreement a legal document showing you that his son borrowed money from him for 600,000 So those are the three assets Or the three yes the three assets that are part of his estate and with the fair market value in October The executor of Kenneth estate received $120,000 of interest on the city of Boston Bond 10,000 was accrued since Since September the fourth remember Kenneth died September the fourth So we're gonna count all the interest up to September the fourth Well, guess what of the 120 of the 120 10,000 was accrued since September the fourth. What does that mean? It means 110 is not included So of the 120 of the 120 110 110,000 just see if I can do better with this 110,000 110 not include. I'm sorry included 10,000 is not so this 10,000 I will not include it 7,000 cash on dividend on the brown stock dated Date of record September 5th. Well by September 5th. He passed away again I cannot include those because he passed away by September the fourth if he was living on September the fifth It would have been fine the declaration date on August 12th. It doesn't really matter. It's on record state He did not exist. So on the record state, that's is when you say, you know, if that person exists I'm gonna pay them did not exist. Therefore the dividend is out The $600,000 loan was made to Brad in late 2015 and he used the money to create a very successful business The note was forgiven by Kenneth and his will. So Kenneth said I don't want the money. My son doesn't have to pay me back Well, yeah, well, let's see what's gonna happen now. What are the estate tax consequences? Well So what's included in Kenneth estate? Would we include the city of Boston Bonds? Of course, we would that's 2.5 million Included that's included. Would we include the stock in Brown Corporation? Yes, would we include the promissory note issued by Brad that he forgave for his son? Sure. It's as if his son gave it to him. Then he gave it back to his son. So it's his money So that's also included and we add to this the 110,000 in Interest that he received the 110,000 and this is my pen is acting up 110,000 110,000 of interest So that's what's included. That's what's included in his in his estate The dividend is not because we have to look at the records date the records date What we have to understand what what is the records date? The record state is when the company the issuant company They look at the record and they see if that individual exists. Who's that individual? Well, really on September the 5th. Kenneth did not exist. Kenneth did not exist. Why because he passed away Therefore there is no no dividend involved. No dividend involved Let's take a look at the second question at this question at the time of her death on September the 4th Now very very important to remember those states are important. Okay, Alicia had the following asset now We're talking about Alicia She had a bonds of emerald emerald tool corporation with a fair market value of 900,000 now I can give you this information or I can give you her brokerage statement. Okay Stock and drab corporation fair market value 1 million 1 1 million 100,000 insurance policy face amount 400,000 on the life of her father Mitch and They're saying the fair market value is 80 and that's the cash surrender fair market value because if Mitch passed away It's 400,000 if she wants to cash out if she wants the value of that insurance That's assumed before she died. She can get 80,000 because that's the value of the insurance How did we know the value is 80,000? It will be given to you now also rather than give you this information I can show you an insurance statement and part of that insurance statements will show what's called cash Value and I will show you the cash value is 80,000. So I think I can turn it into an exhibit Traditional IRA. She has 300,000. Okay, Alicia was also the life tenant of a trust The fair market value of that trust is 2 million created by her late husband the executors of births estate Which is her husband has made a q-tip election now. We need to talk a little bit about q-tip real quick I did not cover it in the in the In the recording. So let's the q-tip. It's a qualified turnable interest property. And how does it work? We have husband and wife. Let's assume just kind of for the sake of illustration here. We have Bert and Alicia. Okay husband Husband and wife We have the husband is Bert. Alicia is the wife now Bert passed away and Bert what he wanted to do he had some assets, but he wanted this asset To be first to be used by his wife Then eventually distributed to his kids. So and usually this the q-tip usually use it doesn't have to but usually what happened is Usually it's when you have a second wife and you want to protect your kids from your first wife Okay, or the first spouse wants to from the first spouse So what happened is that's Bert died but he won't let's is it doesn't have to be but that's usually when it happens So what Bert wants to do he Bert's wants to keep the money To Alicia but once Alicia dies he wanted to make sure that the money goes to his kids Whether they're from the first marriage or second marriage. It doesn't it doesn't really matter whether the The kids from the first or the second marriage. I'm just giving you an example To illustrate the point so what we what what you would do is you would Set up a trust called the cute and you will have a q-tip election Basically, what's the q-tip election? It means Alicia can enjoy the benefit of the trust for example, if it's stocks or bonds She can get the dividend she can get the interest and live of that So Bert wants to protect her while she is alive make sure she has enough income, but once she passed away Bert wants to make sure that the asset goes to his kids. So so Alicia doesn't get married and run away, right? That's that's basically the idea. Okay, so that's the q-tip election and basically so basically what happened is when Bert transferred the money to Alicia Then he did not have to pay any taxes on it now because he did not include that in his estate So it was passed to Alicia simply in the form of a marital deduction So we'll talk about the marital deduction next but basically when you pass assets to your spouse It's it doesn't include in your gross estate now Alicia also expired now It has to be included in her estate so simply put the two million will have to be included if the question is it is asking about this So Bert did not have to include in his state, but now Alicia will okay But October Alicia estate received an interest of eleven thousand five hundred six thousand accrued before September 4th Which obviously will be included paid by the paid by emmerland and a cash dividend of six thousand from drab Well, also that's gonna be included the drab was declared on let's see when when the date of record date of record was September 3rd So that's gonna be included. So date of record of the dividend. She was alive on September 3rd. Therefore. She's gonna include that Although Mitch survives Alicia. She's designated beneficiary of the policy.  It doesn't matter what amount is included in Alicia's estate That's the question that we need to answer. Well, what should be included? Well The nine hundred thousand of course, it will be included. Okay the stock and drape corporation. It will be included Now the insurance only the cash surrender value because she would only collect the four hundred thousand if her father passed away So she's only gonna collect eighty thousand the cash value the traditional IRA. It will be included Bert the state of two million that was transferred to her in a q-tip election. It will be included The interest payment only six thousand will be included and the dividend she was alive Nine thousand will be included. So if we add them all up, they will they should add up to four million three hundred Ninety-five thousand if my math is right four million Three hundred and Ninety-five thousand hopefully added nuts did not miss anything the nine hundred thousand the one point one the six thousand the nine thousand the eighty thousand The three hundred thousand and the two million. That's the what's included in Alicia's gross estate Let's take a look at another example at the time of Matthew's that he was involved in the following transactions Matthew was a participant in his employer's contributory qualified pension plan The plan balance was two million is paid to Olivia, which is his daughter and beneficiary Very important. His daughter is different than his wife. The distribution consists of the following. Okay, so he got two million worth of value The the employer contributed nine hundred thousand Matthew's after tax contribution He contributed six hundred thousand after tax an income earned by the plan over the years Half a million so overall his pension was two million and it's gonna go to his daughter Olivia Okay, Matthew was covered by his employer group life insurance plan for for him for employees the 200 proceeds paid to Olivia the designated beneficiary So Olivia gets the group Group term life insurance for her father. That's fine. What are the federal tax consequences of these events? Well, we need to know What are the federal? Consequences well, guess what? He's gonna have to include in his estate 2.2 million dollar why it's the two million from the employer the plan the pension all of it Plus 200,000 of the gross proceeds. That's included in his estate. That's the federal estate Consequences, it's gonna be included and obviously that's way below the No tax consequences from the federal estate perspective because that's below the amount That's required 11.4 million in 2019, which is way below not even 20% of that or close to 20% Be the income tax consequences. What are the income tax consequences? Remember Matt, you will have to file his final return and what's gonna include what's gonna be included in his final return Guess what? Let's go back here He's gonna include he's gonna include the 900,000 what the employer contributed Okay, and he's gonna have to include the income earned by the plan those two are taxable why because he's gonna have to file his final return and That's that's his income for the for that for that year now. Remember the 600,000 is after tax contribution That means he already paid money on that amount already paid money on that amount But the full thing will be included in this estate. That's different So the full thing will be included in his estate, but when he filed his final return That's what's taxable because the question is what's the taxable? What would the answer to part a change if Olivia was his surviving spouse not his daughter? Well, if it was if Olivia was his surviving spouse That's fine. It basically there is no tax state anyway But the point is that we're gonna be kind of planting the seed for the next session Everything will be included in his gross estate then everything will be deducted. What am I what are what am I talking about here? Here's what's gonna happen. So if Olivia what his what was his wife? It's gonna be 2 million Remember the 2 million the tomb. Let me just clear this Okay, so that we would include the 2 million Right here We would include the 2 million here Then whatever the full amount 2.2 million then it will be less It'll be less 2.2 million. So the 2.2 will be included in the first line Then it'll be deducted in the second line. So it'll be zero because that's his wife And anyway, it's gonna zero out because of the unified tax credit He's gonna get enough credit that if we look at the unified tax credit here That's gonna wipe out because remember his estate is 2.2 million and they'll give you a credit up to 11.4 million So it's not a big deal. Okay, so that's the that those are the consequences here Let's take a look at this question at the time of his death on July 9th. Aiden held Rights in the following real estate. Okay apartment building the fair market value to point 1 million Three farm 1.5 million pastor land 750 and as personal residency of 900,000 The apartment building was purchased by Cleo Which is his mother and his own in joint tenancy with her So So the mother paid for it But he he had a joint tenancy the three farm and the pastor land those two Were gift from Cleo to his to Aiden and his two sisters The three farm is held in a joint tenancy And the pastor land is tenants in common Aiden purchased residency And owns it with his wife. So the residents see him and his wife and The as standard by entirety how much is included and Aiden gross estate based on the following assumption again This could be a typical CPA simulation on the exam They would say, you know, if the amount and whether it's you know, what's what's the amount if any So on and so forth Let's assume Aiden dies first and is survived by his mother His sisters and his wife. So he died first if he dies first.  He doesn't have anything because It's it's owned by the technically owned by his mother and he dies before her. That's out The three farm. Well, the three farm. Let's see the three farm and the pastor land we said Let's go back here The three farm and we're gift to chloe the tree is a joint tenancy is a joint tenancy and the pastor is owned joint The three farm is held in a joint tenancy and the pastor is owned as a tenants in common tenants in common Well, what's gonna happen then it's gonna be because three of them It's gonna be one third one third one third for each one of them. So from the three farm We're gonna include 500 000 and from pastor land easy numbers 250 one third Now the residency it's owned him and his wife joined Joined by entirety then it's we're gonna include 450 Which is 50 it's owned 50 50 by each one under scenario a we would include 1.2 million now if we look at scenario b Aiden dies after clothe after his mother but before his sisters and his wife Well, if he died if his mother died first then this one 2.1 million it was his now So he's gonna have to include this because now he owns the whole thing 2.1 million And what happened to the rest basically the rest are the same the rest are the same in a sense that 500 000 uh 500 000 for uh the three farms 250 and 450 so the rest are the same Let's assume on the c scenario aiden dies after his mother and his sisters but before his wife Well, if that's the case his sister died it dies And his mother died so he's gonna include the 2.1 million He's gonna include the full one the full 1.5 million We're gonna add the full amount now the 1.5 Because now it's his the 750 but His wife would still share half of the house which is 450 Okay, last scenario aiden dies last which is his mother dies So the apartment building is his his sister dies now. He owns both of these and his wife dies He got everything under scenario d all of those are included in his estate So it's very interesting to see how this you know plays out see how this plays out Now in the next session we're going to be computing the taxable estate And part of the taxable estate basically taxable estate is line 1 minus line 2 Which is this is what i'm talking about here line 1 which is gross estate We talked about the gross estate less the expenses so we need to talk about line 2 This is what we're talking about here This is the second session and hopefully it will start to put this whole picture together the whole formula As always i would like to remind you to like the videos if you like them share them put them in playlists If you're studying for your cpa exam Visit my website Invest in your career. It's worth it cpa is a lifetime investment. Good luck and study hard


Everyone, save your 1000 here. Look, the cabinets are here. And then later we'll be getting the countertops. They'll come in after they put the cabinets in. Cool. Stick around. Come back a little more. Yeah, these things are cool. We adjust them down. Adjust them right here, right here. Pretty neat. And the self-closing. All right, we had pizza because we have no sink. So, they have to come back tomorrow. And they gotta put a wall, like a wall in here to hold the granite top. So the granite don't break. I wanna head and tuck that out because they wanna have to come.  Three and a half inches. So, but yeah, this here is a story in itself. So the granite to come even here, this is not granite, but you get the idea. I wanted it to come even. But I guess it's gotta run that way. So anyway, I got a story about that. But this is day one.  He's got a thing that measures this for the sink. We're going with the under mount sink. So we're gonna have a nice faucet on it. So they're gonna measure that. And then they gotta cut the whole, cut it and polish it the same way with over here because it's gonna come around here. It's all gonna be one piece. And then over to here. So it should come out like this, kind of rounded I guess. So anyway, that's what we're looking at so far. It's gonna be nice. Oh, our drawer pulls. We had these for several couple of times at the yard sales, but they in sales will range these. So I think those will look nice on there. 22 of them. Now we got three drawers there and then all in here. Got the space and these are cool. Awesome. Yeah, so it's gonna look good with the stove. These are an antique white versus stove in them, but it's gonna look all right. So anyway, this is the end of day one. They're coming back in the morning. I'm gonna finish this up. I gotta do the whole, that's not a big deal. So then of course, this will have a skin back here, you know, to match this for the bar area. So all right, looks gonna look good. So this is the end of day one guys. Okay guys, the cabinets are finished. We've got the poles on here or handles. Got my receptacle, I just put that in and I went ahead and changed that one to match. So this is a little darker than that, but maybe I'll change this later if I can find a darker one, but that's okay.  So that won't be too bad. This will come out and I'll just go right over top of this. Same with this, it's gonna come to here. So yeah, we're gonna go all the way up with the backsplice. So yeah, I think it looks pretty good. Awesome. So yeah, that's pretty cool. Now these handles came out of her aunt's house up in Canada, awesome. So yeah, then we got these in here. They also sold shut. So it's coming along.  Pretty cool. Everything self closes. All right, so this is where we're at right now. This is day two, so it's getting there guys. I'm excited, she's very excited. She's waited five years for these, so awesome. Stay tuned for more. Okay guys, so we'll use work. I went ahead and did a quick little thing. So yeah, so she's back, it's almost nine o'clock now but we had to, we took the other sink back and we went ahead and we had to get a new microwave. It's 900 watts, so it'll be fine but we had to get one to fit in there because the better of these two, that one, her mom thinks it's 1200 watt and our old one was 1100 watts. I'm gonna keep the better of the two and of course this one will be, what I'm gonna do is put some stuff to keep up from sliding that rubber mat stuff and it'll stay right where it needs to be. So that slides out and then I'll mount that surge protector up in there like up here. So that way when we pull it out, it'll be up out of the way. So that'll be our good one. Like I said, I'll save one for backup in case something happens to that one. Whichever one we don't save, what's gonna happen to it?  Yeah, and she was always talking about I don't know why you wanna do that but earlier she was like, well won't you use the one you're not gonna keep and blow stuff up and do something pretty with it? Yeah, I like to have pretty colors so she's coming up with ideas to help us blow up the next microwave. So that'll be cool. So this is the counter install, just fast forward through that so you guys can see what they were doing and everything. Now, on the next installment of the kitchen, get it, install, install, we're installings. Yeah, we're installing. She don't get it yet. Five minutes from now, she'll go, oh, I get it. Because you know, we installed the cabinet. Yes. So our next installment's gonna be installing the granite. Right. So anyway, so that'll be the next one. He's gotta come in. It's pretty cool the way he does it. I mentioned a little bit earlier about what he does is he has like his tablet and what he'll come in and he'll do is he'll take pictures of this stuff and it automatically measures and everything for him. Exactly where everything's gonna be, same way here.  They use water and so it's something like a CNC machine. He just types that stuff in the computer, head start, and it goes to work and he goes and has a couple of beers or whatever while it's working. Isn't that amazing? Yeah. And really hardly any mistakes unless the machine the only mistake that could happen is you have something happen to the machine which don't happen that often or you punch in something wrong. Right, right. But it's kind of hard to mess up because, you know. That would be really cool to watch. I'd like to watch that. I'd love to watch it, yeah. Yeah, we should ask him if we can go watch it. Yeah. Yeah, we could maybe do a video on it. Yeah. He might like, he might let us. It's a family thing. We'll promote his business if he lets us do that. Yeah, that would be cool. Our own, watch our own cabinets getting cut. Yeah. We'll ask, but we can't make any promises. Countertops. Yeah. What'd I say, cupboards? Yeah, you're saying that. Yeah, all right, countertops. Yes. Anyway, the countertops, not the cupboards are already here. But, and I already explained where these things come from. Yeah, I love them. I have family loving them. The first year we were together when we went to, they come down and they always stay at New Sumerna Beach and we went over there and she said I got something for you and gave her a bag of these drawer handles. I call them doorpoles. Nobs or handles. They're handles, but so, because she knew that she was eventually gonna do her kitchen. And she thought I'll probably never use them. There was a couple times I almost sold them. Yeah, well I had them for so long. I had them for 20 bucks and they wanted to give me 15, 18. I said, no, look, there's over $100 worth of knobs there and there's still something left right there. So I was like, you can't buy them knobs for that and there's nothing wrong with them. So luckily they didn't sell. Yeah, yeah. Normally if somebody, I got 20 on something, somebody offered me 15, 18, I'll take it, but I'm like, no, I'm giving them as it is because there's, well, we use 22, I'm just here in this kitchen. Yeah, yeah. So it's a good thing. I think they look good. And there's a story that came out of an old house from Canada. Yeah. And they were brought down here from Canada across the border. Yeah. And physically handed over to us. So anyway, so there's our cabinets. So like I said, the next video, I love my kitchen. The next video will be the granite tops and an old house. He'll put the sink in it too, right? Y'all already be in there. The sink will be in. I don't know if I get to hook it up or not, but that's no big deal. But it's under mount. So the sink will go in, then the granite countertop will go on top of sink. So it'll sit down there. Like that one we looked at. Right. So it's pretty cool. So I don't have to worry about putting sink in. So that's cool. Yeah. So but the next one you see for me about the kitchen, that is we'll be finishing it up. And then I'll do one more after that and we'll give you a whole grand tour. Yep. I'm so excited. Of the kitchen when it's done. So just a few other things. Like I said, you know this kind of stuff and you know just some finished work that's later on. Those will be like rainy day stuff or like when she's at work, you know we'll pat some holes or bring it along with me and do that stuff. So anyway guys, thanks for watching. Appreciate it. I know it's probably been a long video, but hey you know when she, I mean we got together and she said she bought it in a abandoned house. That was it. And it was trashed. I'll do a video. She's got one up. So go check it out and I'll do one too of before and after pictures and what we're into now. So it was sad abandoned for five years and vandals came in and just like any other abandoned house. But she saw the potential in it and she loved the old girl and she bought her. Fixed it up. Slowly. Slowly but you know. We're still working on it. This is the last thing that has to be done. Well yeah and then the bathroom and then. Bathroom. Yeah, I'm walking in the shower now. Okay, yeah but I mean the house is pretty much finished. Yeah. That's just stuff. The painted finished and. We don't have to put the walk in shower. And that's just something we're going to do later as upgrades. But as far as the roof, it doesn't leak, but it is original roof. So that'll be our next major thing that we do. But as far as reef having the house, that part, this part's done now so. And it really looks like you're walking in the front door and you see this and it's wow.  Oh yeah. Maybe next year, maybe a little before, I don't know, we'll see. But probably next year I'm going to put these lights in the garage. Yes, yes, I like them and he likes them and I think that they will look really good in the garage and they won't give off heat like the other ones do. And I'm going to put, I'm going to put a bigger, something similar, they don't have this exact style, but it's more of a flush amount of these lights. I'm going to put a bigger one. I think it was it, an 11 inch? These are six inch, but we'll get a bigger one and we'll put it in the hallway. And then I'm going to jump off that and go into the closet and put, I think they got a three inch or four inch and I'll be able to four inch and I'll put a four inch in the closet that when she turns the hallway light on, closet light will come on. And then we'll pretty much be all LEDs in the house, so. Yeah, yeah, which I wanted. The bathroom has an LED light, but it buzzes. Well, it's an, it's an, Yeah, well. It's not pocket light. No, it's not a pocket light, it's LEDs, but they're buzzing. So I shot myself in the foot the other night and said, when that thing goes out, I'm putting one of these in there.  Cause it's not actually lights. LED stands for light emitting diode, light emitting diode. It's a diode, it's not light. So. And there's many in there. So what one blow is out, it still works. Yeah, on that one, yeah. So hopefully for long cause these are cheap, like 28 bucks. Anywhere, depending on what size, 20 to 30 bucks a piece unless you buy the kit, we bought, you know, six of them for 120 bucks. So how often are you going to have to do that? But so I'm saying we don't have to buy the whole kit just to replace it, like the one in the bathroom. That'll get a big one in there. Yeah. And I'll buy two of these next year, two of these sets. And I'll probably go, I won't need anything as, you know, with the rings, it'll probably just be a flat, clean chain for the garage and it'll get 12 of those and put in here. Right. And then the house will be pretty much LED. So that'll help on costs and stuff like that. So, all right guys, I appreciate it again. Sorry about the long video, but we're proud of this. She's very proud of it.   You know, you buy a house, you put in it, what you can, get done what you can, then you do it a little bit at a time. Like this fan, we put the fan up, you know, and I put an exhaust fan in the bathroom. That one never had one. Right. So, you know. I mean, we do things around here, you know. So my attic day's on over yet, I'm sure. Love you, babe. I love you, babe. So anyway, thanks again for watching. Appreciate it, monkey. Mike says she's out for now, y'all. Bye. Oh yeah, I don't get to do the first video in here. Cause the first video I was going to do was it all done. She can't wait that long. So she's going to be doing a video right there with this as her backdrop on an unboxing. So check her out. She'll have that up probably tonight. I like to do the cooking one. Yeah, you'll have that up probably tonight, right? Yeah. Yeah, just an unboxing and review. So she'll, she will be filming the first video in this kitchen.   Well, we own a, you know what I mean?  Oh, well you do. So I will have her do the first video, but we will do, we'll do a lot of videos in this kitchen and a lot of cooking videos. We'll do a lot of cooking videos now. Yeah. So it'll be a lot nicer in here for us to film. So, and we can dim these lights and, you know, we got them up bright right now, but. Yeah. So anyway, Sheba, the myth man alleged I'm gone for now. Mike says she's gone for now, y'all. For the second time, bye y'all. Bye guys, see you soon. Take care.


Okay, good morning, and welcome to my talk today. Yeah, good morning or good afternoon, good evening. I don't really know from where exactly or which time, so you are dieting in right now. I am recording the talk at least at 11 o'clock in the morning. So I think that's about the same time as it's going to be done in the conference. If you have any questions, I think there's a chat where you can do that, where I can read them so I can answer them either on the fly or at the end of the session. So please make sure you use that. Now I'm going to start sharing my screen. Okay, I hope you can all see this presentation now. This is the open source summit, and that's the reason why I want to talk about open source platforms. Cloud platforms to be precise. We're going to have a look into what Kubernetes Cloud Foundry and Knative can do for you. What else is out there? What you can use. I probably have the most detailed view on those three because I have most experience with them. There are definitely more, but I'm not going to have a lot more time to cover all that because there's only 40 to 45 minutes. Now, before I dive into that, I will probably say a few words on who I am and what I do, how I basically came to give this talk. Also then switching more into the focus of this topic. Where did all this come from? Look at the history, how things evolved, what basically influenced other things. And then also dive into the look what basically is a platform. What would I think of, say the turn platform, what are the things people could expect to get as benefits out of it and in turn have to invest basically to deal with it. And then on the technology side, as I said, Kubernetes being the most popular and prominent version of Cloud Platforms nowadays will also relate that to Cloud Foundry and Knative. If the time allows to go a little bit into a demo and then try to wrap things up. Now, as I said a few words about myself, this was a bit of an older version when my hair was a little bit shorter, not younger. And so in my basically daily job, I advise and help clients on their way towards the cloud. I will see a few things more about that soon. On the open source side of things, I am an organizer of a user group or a meetup, so to say, in the area of Stuttgart. Now, of course, Stuttgart is quite a few kilometers away from Japan, but as in those times, most things are being done remotely anyway, you of course also very much invited to join. If the time zone doesn't really match, we still have those sessions recorded and you can find them on YouTube. If you have any questions about that or about myself or about anything that comes to your mind and you don't want to write it into the chat right now, you can always reach out to me on Twitter. That's my handle below, so feel free also to use this possibility. Okay, so reason why I came to this talk is basically a result of my day job where I help or at least I try to help people from their move to from the old world to the new world, so to say. I mean, I've been, I also help people starting with cloud if they don't have an old world, but a lot of people do. And so, deciding on which environment to run your workloads is probably one of the most important musician in there. Also, what kind of skill will the people need to work on that. So it's a choice of technologies providers, education, and of course, making all those things secure. So, this is where I'm in, in various forms, this could be like on a strategic high level away, or educated educating people with classes, or really hands on implementation and or migration of applications towards cloud. Now, looking at that. So this is a bit of a timeline on in in history from things relating to what we today call cloud platforms. Now, an interesting fact is, it already started very early so in 1979 is the first thing on that scale. Now, with Jane truth alone, I wouldn't probably argue a cloud platform was possible, but as a fundamental concept for those platforms, I would probably argue that the container technology is probably the most important thing to run the cloud native workloads. And Docker is the most prominent or popular technology in that space and I think most people have heard of that by now. What's interesting is Docker only came to exist existence in 2013, whereas the technologies to build such a container were already finished in 2007. So, it really took quite a while until the technology got adopted, and even more interesting they were already technologies before Docker that did pretty much a similar thing. For example, Linux container came out in 2008. And nobody if I do that talk live and I ask people if you know Docker or if you know Linux containers the answer is pretty clear I mean the few people that have heard of Linux containers. But I don't know a lot of people that really use them or still use them in production. So but still, maybe it wasn't the right time for the technology back then. In 2011, two technologies came out with cloud foundry and open shift to with the aspect with the focus of like something like a platform as a service to run to orchestrate to scale to fail over your cloud native applications. And this is pretty interesting because they did a lot of things that Kubernetes does today without using Kubernetes and without using Docker. So that has changed over the time, because the adoption of Kubernetes is is just so so big. So that's something we're going to look at like how did this technology start, and now how have they transformed under under influence of of Kubernetes. We'll have a look at Istio k native, and then the latest cloud foundry developments and I'm going to talk on all of them but it's basically the cloud foundry for quit as part which we're going to have a look into in the live demo, if, if this works out. Now, they can see, there was quite a bit of history and that also leaves the people today in the in the decision so what could be the right one for me and how can I approach that. Now, if you this is, I could also do that live but it's in the screen will just work as well. So the three technologies into a Google Trends search the result is very clear. I mean, Kubernetes dominates this space by far I mean this I don't think this is only to the space where people Google for that search term, it's it also reflects fairly the adoption. So, communities came to the game fairly later but it really took the work by the best on and even if you take communities out, you can see that can it if well can it came even later it was building communities in 2018 cloud foundry is doing kind of a steady line there. The question was to me why why do people. Why is that right. Why is the one so popular yet or not. What can do better or worse and the other things I would like to reflect here a little bit. Now, I personally started with this journey. In the days of cloud foundry before Kubernetes and looking at things as I said from a past perspective like platform as a service. You don't really worry too much about those containers. The focus you're more on an on an application level. So, you push the applications you bind them to services you use routes for the connection to the end user. So all those, this concept of fairly easy to grasp and understand they don't really have all that much configuration possibilities and scope, but they're very much tailored and focused for a certain for a certain use case. Now, if you start when I started with Kubernetes that there were a lot of more things, as you can see here, and, and to be fair, this is not like a one to one comparison. What so I don't want to say you need all the things here that you need to do the same thing with like with two artifacts before and cloud foundry but what I would say is you should understand most of them in order to to figure out what is the right way for me to do it because Kubernetes has way more options and configuration scope, which can be very powerful, but which makes it also sometimes difficult to learn and understand. Even though, especially if you look at all the things here, you wouldn't even find a part which is called application. And the reason is that Kubernetes doesn't really operate on that way on that level Kubernetes operates on a level of containers. And you see a container is also a Docker image here. This is like the abstraction level that the platform speaks. So this is also already one of the fundamental differences there. Nevertheless, this is how the way how things look. In this context, I found a pretty funny tweet from Aaron Gupta, who is like I think a Docker captain and a Java champion and very active in the community space as well. So he I think he understands really well what he's talking about. And saying everybody doing Kubernetes seems to be not happy with it and everybody who's not doing when it is seems to be craving for it. And it's probably not that way that people are not happy with Kubernetes. I don't agree with that because I think this can make you very happy. But there's a certain truth in that that there is there's a big attraction or hype towards the technology. And as soon people get to start working with it, a lot of people realize it's not as easy as they have thought in the first place. And so that also brings in a high level, a high degree of complaints. And starting from here, we will see where we're going to go. Now, coming to the term platform. So what does that mean I would try to to illustrate that on a bit of a diagram, starting from a perspective of a developer. And also figure out what are the additional roles that platform describes. So if the developer has the intention to build and write and build codes and run it. So some, some users can can benefit or exploit it. The first step would probably be to put it into like a source code repo to do a build step and get a runnable artifact out of that. And those things are more normally done with CI and CD pipelines with a high degree of automation if people do that right. And on the other side, a lot of code will probably not work as with the code alone. They will depend on legacy systems like databases messaging or any other third party tier applications. So there's the second rule coming in the people to administer those those pieces. Now to for the application to talk to the database, it most likely needs some configuration or credentials to actually get there. In the end, those things will kind of be baked into a container of at least be provided to a container to consume that. And then it needs to run somewhere. Now, all of that is probably what I would say see as a as a platform and there there's the third role, which is called the so called the administrator to run these things in an in an automated fashion. And we can see a lot of technologies down there that provide things like that. And I also would like to mention that there's a bit of a fourth role, because depending on what level you and what abstraction level you enter that form. It's not always clear who owns which responsibilities so who owns. I think it's pretty obvious that the developer owns the coding part, but who owns the build part who is basically building the framework to build the container update build the application right. And then next step would also be who owns the, the part of building the container. And that includes like who is providing the base image for that container. And who is about to patch that image if things go wrong. So this role doesn't always come to existence. There is visibility very quickly, but if something goes wrong, it's suddenly there and it also needs some kind of clarification. Yeah, who is now in the position to patch such a corrupt base image in case if I have for example a heart bleed or any similar vulnerability that only appeared at a certain point in time when the code was already running in production. And so a platform to to wrap things up is basically missing a slide here is something that will help all those included roles. And most likely you will have all that four roles, even if it's like in one or two persons but you have all that roles. A platform to responsibility is to make those things easy to people that consume it. So the less people have to do with recurring tasks that the more able they are to focus on things that are really important and make a difference for the consumers. Now, a couple of ways to look at that. I'm just going to move my image here around little. So most of you will be familiar with like the day zero to day three operations. And where the day one and day two are in the context we talk about the important ones to looking at what's the platform. This is basically what a code is built what a code is packaged where it contains containerized and deployed to the application and then add to the platform and then and they to the platform taking over with all the power that it has to like scale recover from failure and patch dynamically providing observation possibilities and so on. So the difference is really being being made here to say these are the capabilities that I need. So this is the right platform for me. Another one to look at is, which is the abstraction layer that my platform would work with. Is it's going to need only containers. Does it accept also looking source code in forms of either applications, or even go further and go into the world of what's called serverless or function as a service where event driven architectures work and you have only very short living applications in the pits that are being executed very often so there's a lot of distinction to be made. And just to take this away up front there there is no best platform to solve all the problems. I mean that it's always I told you I'm a consultant so the answer will always be it depends and you can see quite a few factors here what it really depends on. Now, as I said before that platform will help to make it easy for the roles involved to do the right thing. And starting from here we going going to look at the various platform technologies. So Kubernetes that the one that everybody seems to want to have or seems at least seems to Google about is actually coming from the company Google Google has an internal container platform that it uses for the majority of their of their workloads, which uses the very similar container and orchestration concept. And this was never open sourced in that in that way. But from a technology perspective, it goes into the same very much in the same direction, and Google decided to basically put that into a open source format and give it out to the world. And to basically come up with something which is not opinionated very open and extensible. So, a very virtual ground for a lot of new open source projects and possibilities. It's the major project of the CNCF. As I said before it has given ground to many, many new developments, which influence the way we run our workloads today. So, if we're going to do the same thing as before and say, let's start from a development perspective and say I have an app, and I want consumers to get to this app on a runtime. Then the first thing that needs to be done is actually doesn't really touch Kubernetes, because you have to build as I said is container. The Docker file is probably the most prominent way to do that. However, there are alternatives. There is, for example, a company called chip from Google. If you have a Java application, there is also the build packs technology that I come to speak of later. But let's just assume you need some mechanism to get your base container image, a runtime for whatever your application is about, and then builds your image. Put the application on top and you have a ready container image with your application. You need to push this to a container repo or a registry. And that's the way that all the initial and required steps need to do before you can actually do Kubernetes. Now, in Kubernetes, this is always a bit difficult to visualize. I decided to use the term kubectl create to create a so-called deployment. What that means, it will first of all reference the image from the registry that you have pushed before. This is without that it can't do anything. It will not be able to see an app or something like that. And it creates a construct which is called a pod. And the pod means one to many containers in technical terms. In biological terms, it is a group of whales and you probably have seen that docker whale icon before. So it already implies from that point, multiple containers can run in such a pod. I symbolized this with a second container in here. Over that, the umbrella object of that is a so-called replica set. And as the name said, this is about the replicas of such a pod. Important to know here is that even though your hand can have multiple containers within a pod, Kubernetes can only handle pods. So this is the smallest unit of deployment that Kubernetes can address. So it would be able to say, I want this container to be running with three instances inside of the pod and this only with one. So they either start and stop together. And that's it. On top of this replica set, there is a so-called deployment object which kind of maintains the versions of those replicas. So whenever you have a new container and you have patched your image, then you can do that. And you will be able to expose your endpoint to an end user. Now, looking at that, that already contains a lot of things that you can do. So you can scale on basis of your applications in the containers. You can dynamically switch over from one version to the other. You have possibilities to expose that workload to the end user. And what you can't see here yet is basically you are able to recover if something fails. So, yeah, the value you can use to see is it's a runtime for container workloads.  It can manually and automatically scale the pods. It can do rolling updates for the new version. And you can easily extend it and put it up wherever you want. As it is coming from a bulletproof implementation of internal Google workloads, it has a high degree of robustness and stability. And you can get it pretty much everywhere. So either on your local machines or you can get to the major cloud providers. Most of them will have a Kubernetes service. So it's a really easy way to get started there. Looking at the problems, so to say. I mean, Kubernetes in itself is agnostic pretty for what is in the container. You can configure it to like monitor and observe that. But in the default state, Kubernetes will just treat each container in the same way. Another problem that I see very often is getting to understand and apply all that correctly. It takes a steep learning curve. The extensibility and configurability is of course an advantage, but it can also be a disadvantage. In case it's just losing things out of sight because it can get somewhat confusing. YAML is always a point about a lot of discussions.  You most likely will have to deal with it when working with Kubernetes. And to look at which workloads is the right one, then it's definitely going to be container images because that's what it really deals with. Now, looking at that, that means it will divide those responsibility into a couple of segments. And only after you register the image, Kubernetes will be able to take over. So day zero and day one is basically not really a Kubernetes thing. Kubernetes will really unfold its power on the day two side. I mean, you could of course argue that deployment is also a step in there. That is of course true. But it doesn't interfere with the building of the container process. Now, look at Cloud Foundry. And as I said before, Cloud Foundry was already around in the time in 2008 with a strong focus to be very simple for development. And there is, if I only could explain Cloud Foundry in one sentence, it's probably really the hike below where it says, here's my source code running on the cloud for me. I don't care how, which already goes a long way and shows the perspective. It's really, I don't want to worry about everything what is below my source code. And I want developers to be able to quickly build, test, and deploy and scale their applications. So the biggest contrast is different flying height basically towards looking at Kubernetes and also very opinionated. So it's by far not as configurable and extensible and so on. It was really designed as a way to take it, this works that way and it should be fine for you. Now, looking at the same thing in Cloud Foundry terms is you would access an application code directly. So you would say CF pushed to an application and then this application would go into the platform. So basically there's an invisible line here. I hope you can see my mouse that where the user interacts with and doesn't interact with. So the user in this case would only submit the code. Everything that comes into the hand of containers will be will be handled within the platform. Cloud Foundry will detect what would be the right base image what would be the right runtime which is called build pack here to run that application created image for you put into a registry and run it. So it will eliminate those steps and also take it out of the configuration of scope. Now the other important thing our command is to do the such a fine service call, which will basically get the configuration of back end services and inject them into this application container. Also, to make things simpler in terms of handing the back end services from a developer perspective. Of course there needs an operator that provides that services. But there is also an API to work with this. Important to say here is this distinction between applications on services this basically ties back to the 12th factor app manifest, which kind of declares or recommends I don't know how to say a separation of state less applications and stateful services. This is trying to be enforced here also with the names of the services all the stateful components like database messaging everything state affected and the applications should be stateless code. Otherwise, the automation within the platform. Will we would not know it and would treat the code in the wrong way I mean this of course applies in the same way for Kubernetes. If you have in memory state and you scale your application you might have very unwanted effects. Now, in the end it will bring back a route to the end user so similar to a service and or an ingress in in Kubernetes. This is also being done manually here automatically here. So, the biggest difference you can see here is the day. The responsibility of the platform goes further to the left, because this one is really involved in build packaging and containerizing of the application. Whereas the, the part on the left will will can have a bit better focus on providing the source code of the application. Now. So, having a do a value statement in here under the from a workload handling perspective. It does very simple thing as Kubernetes does basically with a new version it does exactly was Kubernetes does because it's running on a Kubernetes infrastructure now. The focus really is simplicity and the application awareness. So, you work on a different level, and can kind of things from from that to that from that perspective. Now on the problem side I would say. Yeah, it's. I don't think people know about that so much. Same will be a thing with K native later on, and also has this limitation of, of the build packs coverage so in Kubernetes you can run pretty much everything that you can run in a container. In cloud foundry you can only build those things where an application is there. I mean this is definitely the case for most common programming languages. But if you outsource this, this runs a bit responsibility platform this is of course something you expect to work. And this of course could be a thing where you might have limitations. Now, in there you can say, you can run apps and containers. So, the focus however is definitely doing things in an application level. So if you use cloud foundry and only push container images, and you're basically missing out the core part of the value. All right. Finally there is K native, which is an as the name says native to Kubernetes. So this was built. When Kubernetes already existed, and had significant influence from previous platform as a service concepts like out of open shift or cloud foundry. It also tried to put in the functionality of running functions or being a platform for running function workloads that start very quickly and also terminate very quickly. To get a better utilization out of your environment without having idling components. If this one needs Kubernetes and Istio, Istio being a service mesh, so that it actually can have insights of the of the traffic within the cluster. In order to react on that traffic, it also needs to know about that traffic and say if there's a lot of workloads coming in, they need to scale up. If there's no workloads coming in at all, I need to scale down even scale down to zero so there are no instances left. And yeah, sum it up to focus on simplifying the Kubernetes experience on one side and also provide service capabilities. Now to be fair, kind of provides more than what I'm showing here today. So the there's a serving component, which can be seen as an equivalent, so to say, in functionality to what we have seen on cloud foundry and Kubernetes site. But there's also an additional eventing component, as the name says, that takes care of event driven application architectures and integrates with serving here very well to support the eventing mechanisms. There's also tecton as a build and deploy component, however, this was initially a part of Knative but now got outsourced as a separate project. So of course it still works with it, but it's not a really an official Knative mandatory component anymore. Now to get to your Knative running application. You basically, sorry for that, you basically to repeat all the same steps that you have done in Kubernetes. Even though Knative has the ability to deal with functions and deal with the functions properly, still those functions need to be provided in the form of a container. And so, Knative will not do the packaging of functions into container images. But it can deal with images containing functions in a very good way. So, again, the responsibility of building that image and that part of the action is there. However, this is something that can, for example, be addressed with the tecton component. Now once it is running, it has a very simple to use API. It says the top-level object is so-called KN service. Now this makes things a little complicated as because we have services in Kubernetes and we have services in Cloud Foundry and all of them mean a little different thing. So here in Knative, the service is actually the top-level component of running such a workload item. In this case, yeah, you provide an image, then the service object will be instantiated. This will, in turn, create a configuration and a route object. And the configuration object will have potentially multiple revisions. So as I said before in Kubernetes, you can have deployed multiple replica sets and one will basically replace the other one with a graceful failover, so to say, or like rolling out the new one without giving an outage or downtime to the end user and the consumers. Knative takes this a step further and with revisions, you are able to run multiple of those revisions, basically multiple different versions of your application and the route will decide how much percentage you would get on either side or configuration, how the traffic is being routed to those revisions. There is the concept of like canary deployments where you would like to say, maybe I want to roll out that new version only for a group of tests or a certain region or a certain percentage of users, then you could do exactly that. And see if you realize it's not working the way it should, then you could simply roll it back or change the percentage back to the one which is still in there and is working well. Now, to put this into a perspective, there are also as route image revision and service fairly minimal concept of things that you need to deal with in order to use a Knative. So it also say from a learning curve or from a developer simplicity kind of perspective, there is an improvement there. Now, looking at this, of course you need to do those steps in advance, but on day two, Knative brings significant advantages. So, yeah, it runs function as a service workloads, it can scale to zero. So it of course can also auto scale to a much higher amount if the workload suddenly increases. You can auto scale in Kubernetes as well, but out of the box the metrics to trigger that are only CPU and memory basically the mess that the the metrics the container can can can detect. In here, the metrics that can be detected is also the traffic on the wire so if there are sort of things coming through, it will scale up and the weighted routing to say I want to have this and that percentage of the workloads. So, again, the adoption and popularity is a is a problem. Late integration right here this must be a copy and paste arrow. I mean, you could say it should have been there earlier but this wasn't really possible because it used it it required Istio so I'm going to just correct that this one is so sorry for this. We can jump back in here. And I took this error out. Important thing is on a workload perspective you can. It has containers applications and functions. So, it is able to provides mechanisms to build that. And they should also all come in a container scope, but it has the ability to look into them quite a bit better. Why am I summarizing all this to say Kubernetes will probably come along and provide the the the container platforms technical capabilities so you can crash your workloads could is will bring it back you can scale them up in case if you need more instances and more more power or load balancing. And so everything you would expect or such a platform is something that we need is provides in a very very well and robust way. So, the cool things with cloud foundry and can you freely is it's they're not replacing it. So it's not like an either or and say well if I want to do cloud foundry of it okay if I cannot do Kubernetes, because they are running on the same platform. So they can just be added and installed on top of a running Kubernetes environment. This will give you the possibility to say, Well, I can try I can now push code, and I can push containers. And if I, and in the end they are going to be running in pots on the on the same platform. If. And so cloud foundry can be seen as just a layer on top that provides some easier abstraction for developers. So better developer experience and the to me the most important factor so it's. It's totally free of containers. Now K native adds on a different way so it brings it extends the possibilities to scale zero to do those revisions to scale high automatically and do percentage routing. So, now, with that, I will probably stop this one right here because I'm seeing I'm running out of time. I probably would like to jump in here is, I would encourage, I would like to encourage people to try all that because as I said before, Kubernetes has many, many different offerings. There's a mini cube. There is a kind there is a Docker desktop, all on a local environment so you can run them on your machine and just like start using them. There are a lot of options for public services, Azure, Amazon, Google IBM and many, many more. Most of them have like a free tier or so where you can start using them and just play around with it. Now, for the technologies I've shown. The K native and the various cloud foundry options. There are a lot of tutorials out there which makes it really easy just to start with it and try it out. And, and then it doesn't come with a very high cost or but with a very high effort. If you haven't tried to do Kubernetes anyway, why not put one of the other two on top and see if this doesn't bring any bring any benefit for you. Now, unfortunately, I'm realizing it is already 45 minutes and probably over time here. So I actually I did prepare a demo. And I'm kind of unfortunate that I couldn't go in there, but I thought the other pieces were definitely important as well. If you are interested in that I have given the talk before in a longer version also with demos. You will be able to find it here on the on this playlist or reach out to me. And I can definitely link that one once this video gets published on YouTube. I will link the others. But, but for today it probably wouldn't make sense if I step into a demo for one or two minutes. So apologies for that. I hope you still enjoyed the talk. And as I said before, if you have more interested in those in those topics. Feel free to to reach out to me. And with that. Thank you and opens up for questions.