Exam 20: Income Taxation of Trusts and Estates

When a beneficiary receives a distribution from a trust of an asset other than cash, the realized loss generally is ____________________ (recognized, not recognized) by the trust.

Beneficiary information concerning a trust's income and distributions are conveyed on Schedule ____________________ of the Form 1041.

Which of the following taxpayers use a Schedule K and K-1 to pass through income, loss, and credit amounts to the owners or beneficiaries?

A complex trust pays tax on the income that it accumulates (i.e., that it does not distribute).

Beginning with its ____________________ tax year, an estate must remit quarterly Federal estimated income tax payments.

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

Usually, a beneficiary takes a carryover basis when a trust distributes a non-cash asset.

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

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

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

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

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

For each of the following independent statements, choose the best answer. -The entity's AMT preferences and adjustments pass through to the income beneficiaries.

With respect to a trust, the terms creator, donor, and grantor are synonyms.

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 trust whose income is taxed to the donor, not the beneficiaries.

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

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?

List and discuss the three major functions of distributable net income (DNI) as that amount is used under Federal income tax law.

For each of the following independent statements, choose the best answer. -For a calendar-year entity, the Form 1041 has an unextended due date of April 15.

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?