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Exam 20: Income Taxation of Trusts and Estates

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Question 71

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When a beneficiary receives a distribution from a trust of an asset other than cash,generally a(n)____________________ basis is assigned to the asset.

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Question 72

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Consider the term distributable net income as it is used with respect to the Federal income taxation of trusts and estates.How is this amount computed? Where is it used in computing the parties' taxable incomes?

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Distributable net income for any taxable...

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Question 73

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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.

The Crown Trust distributed one-half of its accounting income to Lee this year.Lee also is allocated one-half of Crown's credit for building low-income housing.

The Willis Trust instrument provides that Tamara,the sole income beneficiary,is to receive $40,000 annually.If trust accounting income is not sufficient to pay this amount,the Willis trustee is empowered to invade corpus to the extent necessary.During the current year,the trust reports distributable net income (DNI) of $100,000,including $30,000 of net tax-exempt interest.In accordance with the trust instrument,$40,000 is paid to Tamara.What is Tamara's gross income from Exeter for the current year?

The IRS encourages ____________________ filing for Forms 1041.

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

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

If provided for in the controlling agreement,a trust might terminate when the income beneficiary reaches age 35.

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

A fiduciary entity computes its alternative minimum tax in a manner similar to that used for a(n)____________________.

Generally,capital gains are allocated to fiduciary income,because they arise from current-year transactions as directed by the trustee.

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

The Form 1041 of a calendar-year trust is due on ____________________ 15.

Remainder beneficiary Shelley receives a $50,000 net operating loss carryover when the Malone Trust terminates.Shelley deducts this amount ____________________ (for/from)AGI on her Form 1040.

Generally,an administrative expense attributable to municipal bond interest should be claimed on the estate's Form 706.

When a trust operates a trade or business,it can claim a deduction for wages paid to employees.

The Yellow Trust incurred $10,000 of portfolio income.Its corporate trustee paid fiduciary fees of $1,000 therefrom.Yellow's accounting income is distributed as follows. · $5,000 to income beneficiary Larry · $4,000 to pay part of the high school tuition bills for Carrie,the daughter of Yellow's grantor Marcia How much gross income does Marcia include with respect to these trust activities?

Tax planning motivations usually are secondary to other objectives in deciding whether to create a trust.