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Exam 28: Income Taxation of Trusts and Estates

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Question 61

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For each of the following independent statements, choose the best answer. 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 -​The entity typically can choose any fiscal tax year.​

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Question 62

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In 2017,the Prasad Trust incurred the following items: Compute Prasad's tentative minimum tax for the year.Prasad does not hold any credits available to reduce the AMT liability.

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Question 63

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The Moot Trust distributes an asset to its income beneficiary that shows a realized gain.What are the Federal income tax consequences of the distribution? What if the asset shows a realized loss?

Marcus has been determined to be a grantor trust by the IRS.Your partner explains that this probably happened because the donor of the trust assets retained excessive powers over the operation of the trust or the use of its assets and income.To what powers is your partner referring?

When a trust distributes an in-kind asset with a realized loss,most likely this loss cannot be immediately deducted by the first-tier beneficiary.

The tax rules regarding the income taxation of trusts and estates are included in which Subchapter of the Internal Revenue Code?

A gift to charity from its 2017 income is deductible on an estate's Form 1041 if it is made by the end of the ____________________ (2017,2018) tax year.

The Chen Trust incurred the following items during the year. What is Chen's deduction for the tax preparation fees?

"First-tier distributions" allowed by the will or trust document are made at the discretion of the executor or trustee.

One-fourth of the Cruger Estate's distributable net income consists of net long-term capital gains.Thus,when income beneficiary Susie receives a $40,000 income distribution from the estate,$10,000 of it qualifies for the 15%/20% tax rate.

The Jiang Trust operates a manufacturing business.Yan created the trust several years ago by contributing a successful sole proprietorship.The trust distributed one-half of its DNI this year to Yan.Yan can retain all of the trust's depreciation deductions if:

The Prakash Estate has equal income beneficiaries Sam and Janet.As allowed by the terms of the will,the estate makes no income distributions during the current tax year.The estate's personal exemption is:

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. a.Complex b.Decedent c.Executor d.Grantor e.Administrator f.Reversionary g.Simple h.Sprinkling i.Trustee -A synonym for executor.

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

The Doyle Trust reports distributable net income for the year of $100,000 and no income from tax-exempt sources.Under the terms of the trust instrument,the trustee must distribute $20,000 to Roger and $20,000 to Sally.After paying these amounts,the trustee is empowered to make additional distributions at its discretion.Exercising this authority,the trustee distributes an additional $25,000 to Roger and $50,000 to Sally.How much gross income from the trust must Sally recognize?

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:

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. a.Complex b.Decedent c.Executor d.Grantor e.Administrator f.Reversionary g.Simple h.Sprinkling i.Trustee -The person who transfers assets to a trust.

The Zhao Estate generated distributable net income (DNI) this year of $100,000,one-fourth of which was tax-exempt interest,and the balance of which was long-term capital gain.Kyle Zhao,the sole income beneficiary of the estate,received a distribution of the entire $125,000 accounting income of the entity.How does Kyle report the distribution?

For each of the following independent statements, choose the best answer. 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 -Distributable net income is used to account for distributions by the entity to its beneficiaries.

A decedent's income in respect of a decedent is subject to the Federal income tax,but it is excluded from the estate tax.