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Exam 28: Income Taxation of Trusts and Estates

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Question 61

Multiple Choice

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

A) $600.
B) $300.
C) $100.
D) $0.

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

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Question 62

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A complex trust can claim a Year 1 deduction for a gift to charity,where the contribution was made on October 20 of Year 2 out of gross income recognized in Year 1.

A) True
B) False

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Question 63

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____________________ is the maximum amount that can be included in the beneficiaries' gross incomes from the fiduciary for the year.

The Circle Trust has some exempt interest income for the year.How does this investment income affect Circle's deduction of its fiduciary fees? Charitable contributions?

Income beneficiary Molly wants to receive all of the municipal bond interest income of the Brenner Trust.A ____________________ of this sort must be supported by a non-tax economic effect.

When a fiduciary distributes to a beneficiary a non-cash asset,how is the realized gain or loss treated?

The Raven Trust was terminated this year and David,the beneficiary of the corpus,received all of the trust assets.The trust had a $10,000 net operating loss; this was the only tax year in which the trust operated a business.The entity has one income beneficiary,Flo.As a result of these transactions:

A complex trust may incur a liability for the AMT.

When a beneficiary receives a distribution from a trust of an asset other than cash,generally a(n)____________________ basis is assigned to the asset.

When a trust distributes an in-kind asset with a realized loss,most likely this loss should be allocated to and immediately deducted by the first-tier beneficiaries.

The Gibson Estate is responsible for the income in respect of a decedent (IRD)of Juanita Gibson,the deceased.Define the term IRD and describe its treatment for Federal tax purposes

The Purple Trust incurred the following items this year. Compute Purple's tentative minimum tax for the year.Purple does not have any credits available to reduce the AMT liability.

Gain or loss is recognized by a trust when it distributes a non-cash asset.

Is a trust subject to the alternative minimum tax? Or does the trust "pass through" AMT items to its grantor and beneficiaries?

A fiduciary's ____________________ deductions are assigned corresponding to the disposition of entity accounting income for the year.

Which of the following is the annual maximum amount to be included as gross income by all of the income beneficiaries of the trust or estate?

When a trust operates a trade or business,it can claim a deduction for wages paid to employees.

Which of the following taxpayers use a Schedule K and K-1 to pass through income,loss,and credit amounts to the owners or beneficiaries?

In the year in which an estate terminates,its beneficiaries receive and can use as their own any unexpired NOL carryforwards proportionately to the corpus assets that they received.

The Suarez Trust generated distributable net income (DNI) this year of $150,000,one-third of which was portfolio income,and the balance of which was exempt interest.Under the terms of the trust,Clara Suarez is to receive an annual income distribution of $30,000.At the discretion of the trustee,additional distributions can be made to Clara or to Clark Suarez III.This year,the trustee's distributions to Clara totaled $90,000.Clark also received $90,000.How much of the trust's DNI is assigned to Clara?