FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 20: Income Taxation of Trusts and Estates

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 51

True/False

Review LaterAdd Note

Review Later

Reyes contributed assets to a trust,designating daughter Maria as the income beneficiary,and grandson Julio as the remainder beneficiary.This year,fiduciary accounting income was $50,000.The trustee accumulated $5,000 of this amount and added it to trust corpus.Reyes pays Federal income tax on $5,000 for the year.

A) True
B) False

Correct Answer

verified

Show Answer

Question 52

Multiple Choice

Review LaterAdd Note

Review Later

With respect to a timely filed Form 1041 for a trust based in Delaware,the IRS will accept:

A) Only paper returns.
B) Only e-filed returns.
C) Returns either on paper or in electronic form.
D) Returns only at its Ogden,Utah office.

E) None of the above
F) B) and D)

Correct Answer

verified

Show Answer

Question 53

Essay

Review LaterAdd Note

The Leonardo Estate operates a business and generates cost recovery deductions.Which taxpayer(s),if any,can deduct these items,e.g. ,the deceased,the estate,the income or remainder beneficiaries?

Like a corporation,the fiduciary reports and pays its own Federal income tax liability.

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

Jose is subject to the top marginal Federal income tax rates.Carlita is considering establishing a trust in which Jose would be an income beneficiary.Considering only income tax consequences,Jose should be designated as:

You are responsible for the Federal income tax filings of the Tyrone Trust.Summarize the relevant due dates and filing requirements for Tyrone.

Judy can claim one-third of the Sweet Estate's cost recovery deductions,because she received one-third of the fiduciary's distributable net income (DNI).

There are several business tax credits that the Yeoman Trust has generated for this tax year.Which taxpayer(s),if any,can use these credits in computing a Federal income tax liability? Explain.

Kip and his wife Biddie file calendar-year Form 1040 joint returns.Kip died this year on April 16.The Form 1040 is filed as a joint return,signed by Biddie and by Kip's executor.

When the Holloway Trust terminated this year,it held a $1 million NOL carryforward.How is the loss carryforward treated? Does it expire with the trust or can another taxpayer use it? Be specific.

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-exempt income.

The Booker Trust is your client.Complete the chart below,indicating Booker's trust accounting income for each of the alternatives.

The Whitmer Trust operates a manufacturing business and distributes the profits to its income beneficiaries.Whitmer passes through to the income beneficiaries the data needed to compute their domestic production activities deduction.

The Bard Estate incurs a $25,000 fee in disposing of the real property of the decedent.The executor can decide to claim a $5,000 deduction against the Federal estate tax,and a $20,000 deduction on the estate's income tax return.

Which of the following is a typical duty of a trustee?

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?

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

Harry,the sole income beneficiary,received a $40,000 distribution from the Lucy Trust,in a year when the trust's distributable net income was $30,000.Harry's AGI can increase by as much as $40,000.

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 one-fourth 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.