Question 1

List some common examples of principal and income items.

Accepted Answer

A common example of principal

Question 2

Identify which of the following statements is true.

Accepted Answer

A)  The personal exemption available to a trust is adjusted annually based on changes in the consumer price index. 
B)  Income received by a trust beneficiary has the same character it had at the trust level. 
C)  Distributable net income (DNI) excludes tax-exempt income. 
D)  All of the above are false. 
A)  The personal exemption available to a trust is adjusted annually based on changes in the consumer price index. 
B)  Income received by a trust beneficiary has the same character it had at the trust level. 
C)  Distributable net income (DNI) excludes tax-exempt income. 
D)  All of the above are false.

Question 3

Sally transfers property to a revocable trust.Under the terms of the trust agreement,Allison is to receive income for ten years at which time the remainder is to go to Tom.During the year,the trust earns $10,000 in corporate bond interest income and recognizes a capital gain of $20,000.The interest is distributed to Allison and the capital gain is properly allocated to principal.Allison (not Sally)will pay tax on

Accepted Answer

A)  $0. 
B)  $10,000. 
C)  $20,000. 
D)  $30,000. 
A)  $0. 
B)  $10,000. 
C)  $20,000. 
D)  $30,000.

Question 4

A simple trust has the following results:
   Calculate the distribution deduction.

Accepted Answer

$60,000 -

Question 5

Panther Trust has net accounting income and distributable net income of $100,000,$75,000 from taxable sources and $25,000 from tax-exempt sources.During the year,the trust makes a mandatory distribution to Julius and Steve of $50,000 each.The distribution deduction is

Accepted Answer

A)  $25,000. 
B)  $50,000. 
C)  $75,000. 
D)  $100,000. 
A)  $25,000. 
B)  $50,000. 
C)  $75,000. 
D)  $100,000.

Question 6

An estate made a distribution to its sole beneficiary of $15,000 for the year.This distribution was not the result of a specific bequest.The estate had $40,000 of taxable interest and $34,000 of expenses attributable to earning that interest.What amount of the distribution is taxable to the beneficiary?

Accepted Answer

A)  $40,000 
B)  $15,000 
C)  $6,000 
D)  $0 
A)  $40,000 
B)  $15,000 
C)  $6,000 
D)  $0

Question 7

Michael died in 2013 with a taxable estate and estate tax base of $6,000,000.Michael's estate owed no state death taxes.Michael's estate includes $250,000 of income in respect of a decedent (IRD),none of which is received by his surviving spouse.His estate had no DRD.The estate collects $200,000 of the IRD during its current tax year.The Sec.691(c)deduction for the estate in current year is

Accepted Answer

A)  $153,000. 
B)  $122,400. 
C)  $90,000. 
D)  $80,000. 
A)  $153,000. 
B)  $122,400. 
C)  $90,000. 
D)  $80,000.

Question 8

The executor or administrator is responsible for all the following estate duties except

Accepted Answer

A)  preserving the estate's existence as a separate taxpayer. 
B)  collecting the assets. 
C)  paying the debts and taxes. 
D)  distributing the property. 
A)  preserving the estate's existence as a separate taxpayer. 
B)  collecting the assets. 
C)  paying the debts and taxes. 
D)  distributing the property.

Question 9

Identify which of the following statements is true.

Accepted Answer

A)  All trusts and estates must use a calendar year-end. 
B)  All estates with gross income of at least $500 must file an income tax return. 
C)  Trusts are required to make estimated tax payments. 
D)  All of the above are false. 
A)  All trusts and estates must use a calendar year-end. 
B)  All estates with gross income of at least $500 must file an income tax return. 
C)  Trusts are required to make estimated tax payments. 
D)  All of the above are false.

Question 10

Identify which of the following statements is true.

Accepted Answer

A)  Tax-exempt income is allocated among beneficiaries in the proportion that total tax-exempt income bears to total distributable net income (DNI). 
B)  Both income required to be distributed currently and discretionary income distributions are included in tier-1 distributions. 
C)  Under the tier system, tier-2 beneficiaries are the first to absorb income. 
D)  All of the above are false. 
A)  Tax-exempt income is allocated among beneficiaries in the proportion that total tax-exempt income bears to total distributable net income (DNI). 
B)  Both income required to be distributed currently and discretionary income distributions are included in tier-1 distributions. 
C)  Under the tier system, tier-2 beneficiaries are the first to absorb income. 
D)  All of the above are false.

Question 11

Income in respect of a decedent (IRD)includes interest earned by a cash-basis taxpayer but not received by the taxpayer before death.

Accepted Answer

A) True 
 B)False

Question 12

A trust document does not define income and principal.The state in which the trust is operated has adopted the Uniform Act.The trust reports the following:
   What is the amount of trust's net accounting income?

Accepted Answer

$2,500 - (

Question 13

Identify which of the following statements is false.

Accepted Answer

A)  The personal exemption for a trust provides a tax savings when some income is allocated to principal. 
B)  Distributable net income (DNI) sets the ceiling on the amount of distributions taxed to the beneficiaries. 
C)  A complex trust must distribute all its income annually. 
D)  The beneficiaries of a simple trust are taxed on their share of DNI irrespective of the amount they receive. 
A)  The personal exemption for a trust provides a tax savings when some income is allocated to principal. 
B)  Distributable net income (DNI) sets the ceiling on the amount of distributions taxed to the beneficiaries. 
C)  A complex trust must distribute all its income annually. 
D)  The beneficiaries of a simple trust are taxed on their share of DNI irrespective of the amount they receive.

Question 14

The term "trust income" when not preceded by an explanatory word relates most closely to

Accepted Answer

A)  gross income. 
B)  taxable income. 
C)  distributable net income. 
D)  net accounting income. 
A)  gross income. 
B)  taxable income. 
C)  distributable net income. 
D)  net accounting income.

Question 15

A complex trust permits accumulation of current income,provides for charitable contributions,or distributes principal during the taxable year.

Accepted Answer

A) True 
 B)False

Question 16

Texas Trust receives $10,000 interest on U.S.Treasury bonds and $15,000 interest on State of New York bonds.All $25,000 is distributed to the trust beneficiary,Gary.Which of the following statements is correct?

Accepted Answer

A)  Gary has $25,000 of ordinary gross income. 
B)  Gary has $10,000 of taxable interest income and $15,000 of tax-free interest income. 
C)  Gary has no taxable income because the trust must pay the tax. 
D)  Gary has $10,000 of capital gain and $15,000 of tax-free interest income. 
A)  Gary has $25,000 of ordinary gross income. 
B)  Gary has $10,000 of taxable interest income and $15,000 of tax-free interest income. 
C)  Gary has no taxable income because the trust must pay the tax. 
D)  Gary has $10,000 of capital gain and $15,000 of tax-free interest income.

Question 17

A trust reports the following results:
   All of the items are allocated to income except the capital gains.Calculate the maximum amount of trustee fees that are deductible.

Accepted Answer

($30,000/$50,000)× $6,000 = $3

Question 18

A trust distributes 30% of its income to Mark and 20% to Nancy.The remaining 50% is accumulated.The trust's depreciation is $1,000.The trust instrument is silent regarding the depreciation deduction.State law requires the depreciation be charged to principal.What part of the depreciation deduction will be allocated to Mark?

Accepted Answer

A)  $0 
B)  $200 
C)  $300 
D)  $1,000 
A)  $0 
B)  $200 
C)  $300 
D)  $1,000

Question 19

Briefly discuss the reasons for establishing a trust.

Accepted Answer

Possible tax savings,professio

Question 20

A trust reports the following results:
   The trust must distribute all of its income annually.Calculate taxable income after the distribution deduction.

Accepted Answer

@#IMG-DLM& Verification of this amount i

List some common examples of principal and income items.

Identify which of the following statements is true.

A simple trust has the following results: Calculate the distribution deduction.

Panther Trust has net accounting income and distributable net income of $100,000,$75,000 from taxable sources and $25,000 from tax-exempt sources.During the year,the trust makes a mandatory distribution to Julius and Steve of $50,000 each.The distribution deduction is

The executor or administrator is responsible for all the following estate duties except

Identify which of the following statements is true.

Identify which of the following statements is true.

Income in respect of a decedent (IRD)includes interest earned by a cash-basis taxpayer but not received by the taxpayer before death.

A trust document does not define income and principal.The state in which the trust is operated has adopted the Uniform Act.The trust reports the following: What is the amount of trust's net accounting income?

Identify which of the following statements is false.

The term "trust income" when not preceded by an explanatory word relates most closely to

A complex trust permits accumulation of current income,provides for charitable contributions,or distributes principal during the taxable year.

Texas Trust receives $10,000 interest on U.S.Treasury bonds and $15,000 interest on State of New York bonds.All $25,000 is distributed to the trust beneficiary,Gary.Which of the following statements is correct?

A trust reports the following results: All of the items are allocated to income except the capital gains.Calculate the maximum amount of trustee fees that are deductible.

Briefly discuss the reasons for establishing a trust.

A trust reports the following results: The trust must distribute all of its income annually.Calculate taxable income after the distribution deduction.

Tax Research

Corporate Formations and Capital Structure

The Corporate Income Tax

Corporate Nonliquidating Distributions

Other Corporate Tax Levies

Corporate Liquidating Distributions

Corporate Acquisitions and Reorganizations

Consolidated Tax Returns

Partnership Formation and Operation

Special Partnership Issues

US Corporations

The Gift Tax

The Estate Tax

Administrative Procedures

US Taxation of Foreign-Related Transactions

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Exam 14: Income Taxation of Trusts and Estates

List some common examples of principal and income items.

Identify which of the following statements is true.

A simple trust has the following results: Calculate the distribution deduction.

Panther Trust has net accounting income and distributable net income of $100,000,$75,000 from taxable sources and $25,000 from tax-exempt sources.During the year,the trust makes a mandatory distribution to Julius and Steve of $50,000 each.The distribution deduction is

The executor or administrator is responsible for all the following estate duties except

Identify which of the following statements is true.

Identify which of the following statements is true.

Income in respect of a decedent (IRD)includes interest earned by a cash-basis taxpayer but not received by the taxpayer before death.

A trust document does not define income and principal.The state in which the trust is operated has adopted the Uniform Act.The trust reports the following: What is the amount of trust's net accounting income?

Identify which of the following statements is false.

The term "trust income" when not preceded by an explanatory word relates most closely to

A complex trust permits accumulation of current income,provides for charitable contributions,or distributes principal during the taxable year.

Texas Trust receives $10,000 interest on U.S.Treasury bonds and $15,000 interest on State of New York bonds.All $25,000 is distributed to the trust beneficiary,Gary.Which of the following statements is correct?

A trust reports the following results: All of the items are allocated to income except the capital gains.Calculate the maximum amount of trustee fees that are deductible.

Briefly discuss the reasons for establishing a trust.

A trust reports the following results: The trust must distribute all of its income annually.Calculate taxable income after the distribution deduction.

Tax Research

Corporate Formations and Capital Structure

The Corporate Income Tax

Corporate Nonliquidating Distributions

Other Corporate Tax Levies

Corporate Liquidating Distributions

Corporate Acquisitions and Reorganizations

Consolidated Tax Returns

Partnership Formation and Operation

Special Partnership Issues

US Corporations

The Gift Tax

The Estate Tax

Administrative Procedures

US Taxation of Foreign-Related Transactions

Filters