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Exam 20: Income Taxation of Trusts and Estates

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Question 31

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The entity is a ___________trust if the grantor retains the power to revoke the trust.

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Question 32

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Of the income received by the Atom Trust this year, 60% 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.

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Question 33

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The Code defines a simple trust as which of the following?

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

This year, the Huang Trust is a complex trust. This year, it distributed all of its accounting income and $5,000 from corpus, to its sole income beneficiary Kun. Huang's taxable income for the year is:

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 first-tier 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.

Olsen has been determined to be a grantor trust by the IRS. What are the tax consequences of this tax status? What are the tax return filing requirements for Olsen and for Peggy, the donor of the trust's assets?

The Zhong Trust is a calendar year taxpayer. Its Form 1041 is due on which date in the following year?

The Jiang Trust manages investment assets that were contributed by Kong several years ago. The trust distributed one-half of its DNI this year to Kong. Kong can retain all of the trust's tax-exempt interest income if:

For each of the following independent statements, choose the best answer. -A decedent created the entity.

Ellie, a calendar year individual, wants to make a gift to a charity that is deductible on her year 1 Form 1040. The gift must be made by Ellie:

In computing the Federal taxable income of a trust, the__________ first, last) step is to determine its fiduciary accounting income.

List at least three nontax reasons that you might suggest to your client Chan that she should consider shifting some income and assets to a trust.

The first step in computing an estate's taxable income is the determination of its fiduciary accounting income for the year.

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-tax interest income.

The Drabb Trust owns a plot of business-related land, basis of $50,000, fair market value of $35,000. Drabb is subject to a 35% marginal income tax rate. Its sole beneficiary, Eddie, is subject to a 12% marginal income tax rate. Drabb's current-year distributable net income is $95,000. What is the most preferable action for Drabb's trustee to take considering only the related tax consequences?

The Yeoman Trust has generated several Federal income tax credits for this tax year. Which taxpayers), if any, can use these credits in computing a Federal income tax liability? e.g., the grantor, the trust, its income beneficiaries, its remainder beneficiaries) Answer for estates, simple trusts, and complex trusts.

Generally, an estate's taxable income is computed in a manner similar to that used for an) ____________________.

A gift to charity from its 2020 income is deductible on an estate's Form 1041 if it is made by the end of the____________2020, 2021) tax year.

In computing distributable net income DNI) for a trust, one removes any net capital gain or loss that is allocable to income.