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Exam 20: Income Taxation of Trusts and Estates

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Question 41

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The Yan Estate is your client,as are many of the decedent's family members.Determine the tax effects of the indicated losses for the Yan Estate for both tax years.The estate holds a variety of investment assets,which it received from the decedent,Mrs.Yan.The estate's sole income and remainder beneficiary is Yan,Jr.

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Question 42

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The Gomez Trust is required to distribute $80,000 annually,split equally between its two income beneficiaries,Lara and Byron.If trust income is not sufficient to pay these amounts,the trustee can invade corpus to the extent necessary.During the current year,the trust has DNI of $60,000.Byron receives an additional $30,000 discretionary corpus distribution.

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Question 43

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Entity accounting income is controlled by the terms of the ____________________ for an estate or the ____________________ for a trust.

The unextended due date for a calendar-year trust to file its Form 1041 is March 15.

Which of the following restrictions applies concerning distributions to trust beneficiaries?

A ____________________ tier distribution is one that the trust agreement requires to be made by the trustee to the income beneficiary. or

Trusts can select any fiscal Federal income tax year.

The Taft Estate was established when Winnie Taft died on March 1,2012.It selects a fiscal Federal income tax year that ends on October 31.For which tax year ending October 31 must Taft begin to make quarterly estimated Federal income tax payments?

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 paid $5,000 of this amount as Julio's high school tuition.Reyes pays Federal income tax on $5,000 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?

A trust might be used by one running for a political office.

Three months after Brianna Timkin died,her executor received the final $40,000 installment from a sale of land that Brianna completed several years ago.Which of the following statements is true?

The decedent's estate must terminate within four years of the date of death.

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 $50,000.

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

Tax planning usually dictates that high-income and -wealth individuals be specified as first-tier beneficiaries of a trust arrangement.

An estate operates a manufacturing business.It can claim a domestic production activities deduction (DPAD).

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:

The Ulrich Trust has 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 $60,000 to Roger and $60,000 to Sally.After paying these amounts,the trustee is empowered to make additional distributions at its discretion.Exercising this authority,the Ulrich trustee distributes an additional $20,000 to Roger and $20,000 to Sally.How much gross income from the trust must Sally recognize?

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 Clark?