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 61

Essay

Review LaterAdd Note

Review Later

Are estates and trusts taxed like individuals? Corporations? Partnerships? Explain.

Correct Answer

verified

Fiduciary entities are taxed in a unique...

View Answer

Show Answer

Question 62

Short Answer

Review LaterAdd Note

Review Later

When a beneficiary receives a distribution from a trust of an asset other than cash,the realized loss could be disallowed under the ____________________ rule.

Correct Answer

verified

Show Answer

Question 63

Multiple Choice

Review LaterAdd Note

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:

The Eagleton Trust generated distributable net income (DNI) this year of $120,000,one-third of which was portfolio income,and the balance of which was exempt interest.Under the terms of the trust,Clara Eagleton is to receive an annual income distribution of $40,000.At the discretion of the trustee,additional distributions can be made to Clara or to Clark Eagleton III.This year,the trustee's distributions to Clara totaled $60,000.Clark also received $60,000.How much of the trust's DNI is assigned to Clara?

An example of an expense in respect of a decedent is the state income taxes attributable to the taxpayer's last paycheck,uncollected at death.

A living trust is a _________________________ entity that is used to avoid probate upon the death of the grantor.

The trust instrument provides that Tamara,the sole income beneficiary,is to receive $30,000 annually.If trust accounting income is not sufficient to pay this amount,the trustee is empowered to invade corpus to the extent necessary.During the current year,the trust has distributable net income (DNI) of $100,000,including $20,000 of tax-exempt interest.In accordance with the trust instrument,$30,000 is paid to Tamara.How much income is taxable to Tamara for the current year?

It is ____________________ (rare,common,impossible)for a trust or estate to incur a liability for the alternative minimum tax.

The LMN Trust 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 $30,000,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 28.3 in the text to address the following items.

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

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 for the interest income.

An estate has $100,000 DNI,composed of $50,000 dividends,$20,000 taxable interest,$10,000 passive income,and $20,000 tax-exempt interest.The trust's two noncharitable income beneficiaries,Shanna and Tom,receive distributions of $75,000 each.How much of each class of income is deemed to have been distributed to Shanna? To Tom? Use the following template to structure your answer.

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?

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 $50,000.Harry's AGI can increase by as much as $40,000.

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.

Cost recovery deductions are assigned pro rata to the recipients of an estate's accounting income.

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

This year,the Nano Trust reported $50,000 entity accounting income and $40,000 distributable net income (DNI) .Nano distributed $30,000 cash to Horatio,its sole income beneficiary.Nano is a complex trust.Nano's distribution deduction is:

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:

Income in respect of a decedent can be subject to both income and estate tax at the Federal level.