Question 1

Which of the following accurately describes one of the rules pertaining to inter vivos trusts?

Accepted Answer

A) Inter vivos trusts may use the graduated tax rate scale. 
B) Inter vivos trusts are allowed the $40,000 exemption in the alternative minimum tax calculation. 
C) Inter vivos trusts can deduct personal tax credits. 
D) Inter vivos trusts are required to remit quarterly tax instalments. 
A) Inter vivos trusts may use the graduated tax rate scale. 
B) Inter vivos trusts are allowed the $40,000 exemption in the alternative minimum tax calculation. 
C) Inter vivos trusts can deduct personal tax credits. 
D) Inter vivos trusts are required to remit quarterly tax instalments. D

Question 2

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 escaping tax on specific types of property held for long periods of time.
B)The specific properties of the trust are deemed to be sold and reacquired at their market values,realizing tax gains and losses on the deemed disposition.
C)Capital properties (non-depreciable),depreciable properties,land that is inventory,and resource property are subject to the 21 Year Rule.
D)Properties can be transferred to the beneficiaries prior to the 21^st anniversary,at their tax cost,thereby deferring the tax effects.
E)Spousal trusts are exempt from realizing a deemed disposition of the properties at the first 21 Year anniversary.

Question 3

Jasmine is the beneficiary of an inter vivos trust.During 20x4 the trust received the following income:
Capital gains: $16,000
Interest: $12,000
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,and apply tax rates and rules applicable to 2018.)

Accepted Answer

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

Question 4

If a trust qualifies as a spousal trust,which of the following is FALSE?

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.

Question 5

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

Accepted Answer

A) Tax installments 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 installments 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.

Question 6

A non-spousal trust account holds two buildings as its assets.Building 1 originally cost $150,000 and Building 2 originally cost $210,000.It is now the 21st anniversary of the trust,and the assets have not been transferred to the beneficiary.The undepreciated capital cost of Building 1 is $85,000 and its market value is $200,000.The undepreciated capital cost of Building 2 is $145,000 and its market value is $190,000.Which costs will be the deemed acquisition values of the buildings for the trust?

Accepted Answer

A) B1 = $150,000; B2 = $210,000 
B) B1 = $85,000; B2 = $145,000 
C) B1 = $200,000; B2 = $190,000 
D) B1 = $200,000; B2 = $210,000 
A) B1 = $150,000; B2 = $210,000 
B) B1 = $85,000; B2 = $145,000 
C) B1 = $200,000; B2 = $190,000 
D) B1 = $200,000; B2 = $210,000

Question 7

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) From a tax perspective, there is little benefit to structuring a business as a royalty trust. 
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) From a tax perspective, there is little benefit to structuring a business as a royalty trust. 
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.

Question 8

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)to 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 ca

Which of the following accurately describes one of the rules pertaining to inter vivos trusts?

If a trust qualifies as a spousal trust,which of the following is FALSE?

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?

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 Propertycapital Gains

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

Individuals: Determination of Taxable Income and Taxes Payable

Corporationsan 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 Divestituresassets Versus Shares

Business Acquisitions and Divestiturestax-Deferred Sales

Domestic and International Business Expansion

Tax Aspects of Corporate Financing

Gsthst Overview

Filters

Exam 17: Trusts

Which of the following accurately describes one of the rules pertaining to inter vivos trusts?

If a trust qualifies as a spousal trust,which of the following is FALSE?

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?

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 Propertycapital Gains

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

Individuals: Determination of Taxable Income and Taxes Payable

Corporationsan 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 Divestituresassets Versus Shares

Business Acquisitions and Divestiturestax-Deferred Sales

Domestic and International Business Expansion

Tax Aspects of Corporate Financing

Gsthst Overview

Filters