FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 28: Income Taxation of Trusts and Estates

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 51

Multiple Choice

Review LaterAdd Note

Review Later

For each of the following independent statements, choose the best answer. -The entity is entitled to a personal exemption of $600.

A) Tax attribute of complex trusts only
B) Tax attribute of estates only
C) Tax attribute of estates and complex trusts
D) Tax attribute of neither estates nor complex trusts

E) A) and B)
F) B) and C)

Correct Answer

verified

Show Answer

Question 52

Short Answer

Review LaterAdd Note

Review Later

The deduction for the Sharma Trust's $100,000 gift to charity is when one­third of Sharma's accounting income for the tax year constitutes exempt interest income.

Correct Answer

verified

Show Answer

Question 53

Multiple Choice

Review LaterAdd Note

For each of the following independent statements, choose the best answer. -In the year of termination, the entity's net operating loss carryovers are passed through to the beneficiaries.

The Uldis Trust has distributable net income (DNI) for the year of $100,000 and no income from tax-exempt sources. Under the terms of the trust instrument, the trustee must distribute $75,000 to Roger and $75,000 to Sally. After paying these amounts, the trustee is empowered to make additional distributions at its discretion. Exercising this authority, the Uldis trustee distributes an additional $10,000 to Roger and $30,000 to Sally. How much gross income from the trust must Roger recognize?

Sixty percent of the income received by the Atom Trust this year constituted municipal bond interest. Atom's trustee also made a $100,000 gift to the United Fund, a qualifying charity. The charitable deduction associated with this gift is limited to $60,000.

Which, if any, of the following statements relates to the tax treatment of both estates and trusts?

The interest income of a trust usually is allocable to (income, remainder) beneficiaries.

The Gable Trust reports $20,000 business income and $10,000 exempt interest income, and it paid a $3,000 fiduciary fee. Gable's distributable net income (DNI) includes $9,000 for the interest income.

The Julius Trust made a gift to the United Charity on August 1, Year Two, from its Year One business profits. The trust's charitable contribution deduction can be claimed in either Year One or Year Two.

The Raja Trust operates a welding business. Its current-year cost recovery deductions properly amount to $75,000. Raja's accounting income was $100,000, of which $40,000 was distributed to first­tier beneficiary Chuck, $25,000 was distributed to second-tier beneficiary Ruby, and $35,000 was accumulated by the trustee. Ruby also received a $25,000 discretionary corpus distribution. Raja's DNI was $80,000. Identify the treatment of Raja's cost recovery deductions.

The Gable Trust reports $20,000 business income and $10,000 exempt interest income, and it paid a $3,000 fiduciary fee. Gable's distributable net income includes $10,000 of net tax­exempt income.

The Chen Trust incurred the following items during the year. Taxable interest received Tax-exempt interest received Tax preparation fees paid What is Chen’s deduction for the tax preparation fees?

An estate (can/cannot) be liable for a Federal alternative minimum tax.

Counsell is a simple trust that correctly uses the calendar year for tax purposes. Its income beneficiaries (Kathie, Lynn, Mark, and Norelle) are entitled to the trust's annual accounting income in shares of one­fourth each. For the current calendar year, the trust has ordinary business income of $40,000, a long-term capital gain of $20,000 (allocable to income), and a trustee commission expense of $4,000 (allocable to corpus). Use the format of Figure 20.3 in the text to address the following items. a. How much income is each beneficiary entitled to receive? b. What is the trust's DNI? c. What is the trust's taxable income? d. How much is taxed to each of the beneficiaries?

The grantor of a trust generally designates both ____________________ and ____________________ beneficiaries under the controlling agreement.

A trust might be used when a married couple is divorcing.

Counsell is a simple trust that correctly uses the calendar year for tax purposes. Its income beneficiaries (Kathie, Lynn, Mark, and Norelle) are entitled to the trust's annual accounting income in shares of one­fourth each. For the current calendar year, the trust has ordinary business income of $40,000, a long-term capital gain of $20,000 (allocable to corpus), and a trustee commission expense of $4,000 (allocable to corpus). Use the format of Figure 20.3 in the text to address the following items. a. How much income is each beneficiary entitled to receive? b. What is the trust's DNI? c. What is the trust's taxable income? d. How much is taxed to each of the beneficiaries?

The Prakash Trust is required to pay its entire annual accounting income to beneficiaries Sam and Janet. The trust's personal exemption is:

The Philmore Estate is subject to a 40% Federal estate tax rate and a 45% Federal and state income tax rate. Generally, an administrative expense should be claimed on the estate's income tax return.

For each of the following items, insert the best term or phrase. An answer choice may be used more than once, but only one choice is the best for each descriptive phrase. -The person who transfers assets to a trust.