Question 1

Which of the following applies to a testamentary trust that is designated as a graduated rate estate (GRE)?

Accepted Answer

A)  Tax instalments are required. 
B) A non-calendar year may be used for tax purposes. 
C)  The highest rate of tax will apply to all income. 
D)  The GRE will become a normal testamentary trust after 48 months. 
A)  Tax instalments are required. 
B) A non-calendar year may be used for tax purposes. 
C)  The highest rate of tax will apply to all income. 
D)  The GRE will become a normal testamentary trust after 48 months. B

Question 2

Which of the following statements is TRUE regarding trusts?

Accepted Answer

A)  Losses that exceed income in a trust are allocated to the beneficiary at the end of the year. 
B) The allocation of income from a trust is discretionary. 
C)  Income that is payable to a beneficiary cannot be deducted from the trust's income. 
D)  The residence of a trust is determined by the residence of the trustees. 
A)  Losses that exceed income in a trust are allocated to the beneficiary at the end of the year. 
B) The allocation of income from a trust is discretionary. 
C)  Income that is payable to a beneficiary cannot be deducted from the trust's income. 
D)  The residence of a trust is determined by the residence of the trustees. B

Question 3

Jasmine is the beneficiary of an inter vivos trust. During 20x4 the trust received the following income:
Capital gains: $16,000
Interest: $10,000
Non-eligible dividends: $8,000
One half of the trust's income from 20x4 was paid to Jasmine, who does not currently have any other sources of income. The remainder of the income remained in the trust.
Required:
a) Determine Jasmine's personal federal tax.
b) Calculate the federal tax for the trust.
(Round all amounts to zero decimal places. Apply rates for 2019.)

Accepted Answer

The answer of Jasmine is the beneficiary of an inter...

Question 4

Briefly answer the following questions:
With regard to non-spousal trusts:
A) What is the purpose of the 21-Year Rule?
B) What event occurs on the 21st anniversary of a trust?
C) What types of properties are subject to the 21-Year Rule?
D) How can the consequences of the 21-Year Rule be avoided?
With regard to spousal trusts:
E) What is the exception to the 21-Year Rule for spousal trusts?

Accepted Answer

A) The 21 Year Rule prevents trusts from

Question 5

Walter passed away this year, leaving a will bequeathing his wife with $80,000 in cash, in addition to his stocks and land, to be held in a spousal trust on her behalf. The trust will pay her the annual income generated by the trust during her lifetime.
Additionally, Walter's-33-year old son, Steven, is to receive a building to be held in a trust until Steven reaches the age of 45. Steven will also receive the assets in his mother's (Walter's wife) trust upon her death.
The assets transferred to Walter's wife consist of land with an ACB of $100,000 and a FMV of $300,000, and stocks valued at $200,000 with a cost base of $150,000.
The building transferred to Steven has an ACB of $200,000, UCC of $180,000, and FMV of $300,000.
Required:
A) What are the immediate tax consequences (identify the income type and amount) for Walter? Show calculations.
B) What are the immediate tax consequences for the assets received by the trust for Walter's wife?

Accepted Answer

A) Walter's estate will have a taxable c

Question 6

Which of the following statements is false with regard to spousal trusts?

Accepted Answer

A)  Property is deemed to have been sold at its cost amount when transferred to the trust. 
B)  The trust property is deemed to be sold at market value upon the death of the beneficiary (the spouse). 
C) Both the spouse and any adult children may receive the capital of the trust prior to the spouse's death. 
D)  The 21-year rule is waived for the trust's first 21-year anniversary. 
A)  Property is deemed to have been sold at its cost amount when transferred to the trust. 
B)  The trust property is deemed to be sold at market value upon the death of the beneficiary (the spouse). 
C) Both the spouse and any adult children may receive the capital of the trust prior to the spouse's death. 
D)  The 21-year rule is waived for the trust's first 21-year anniversary.

Which of the following applies to a testamentary trust that is designated as a graduated rate estate (GRE)?

Which of the following statements is TRUE regarding trusts?

Which of the following statements is false with regard to spousal trusts?

Taxation-Its Role in Decision Making

Fundamentals of Tax Planning

Liability for Tax, Income Determination, and Administration of the Income Tax System

Income From Employment

Income From Business

The Acquisition, Use, and Disposal of Depreciable Property

Income From Property

Gains and Losses on the Disposition of Capital Property-Capital Gains

Other Income, Other Deductions, and Special Rules for Completing Net Income for Tax Purposes

Individuals: Determination of Taxable Income and Taxes Payable

Corporations-An Introduction

Organization, Capital Structures, and Income Distributions of Corporations

The Canadian-Controlled Private Corporation

Multiple Corporations and Their Reorganization

Partnerships

Limited Partnerships and Joint Ventures

Business Acquisitions and Divestitures-Assets Versus Shares

Business Acquisitions and Divestitures-Tax-Deferred Sales

Domestic and International Business Expansion

Tax Aspects of Corporate Financing

Gsthst Overview

Business Valuations

Filters

Exam 17: Trusts

Which of the following applies to a testamentary trust that is designated as a graduated rate estate (GRE)?

Which of the following statements is TRUE regarding trusts?

Which of the following statements is false with regard to spousal trusts?

Taxation-Its Role in Decision Making

Fundamentals of Tax Planning

Liability for Tax, Income Determination, and Administration of the Income Tax System

Income From Employment

Income From Business

The Acquisition, Use, and Disposal of Depreciable Property

Income From Property

Gains and Losses on the Disposition of Capital Property-Capital Gains

Other Income, Other Deductions, and Special Rules for Completing Net Income for Tax Purposes

Individuals: Determination of Taxable Income and Taxes Payable

Corporations-An Introduction

Organization, Capital Structures, and Income Distributions of Corporations

The Canadian-Controlled Private Corporation

Multiple Corporations and Their Reorganization

Partnerships

Limited Partnerships and Joint Ventures

Business Acquisitions and Divestitures-Assets Versus Shares

Business Acquisitions and Divestitures-Tax-Deferred Sales

Domestic and International Business Expansion

Tax Aspects of Corporate Financing

Gsthst Overview

Business Valuations

Filters