Question 1

Income in respect of a decedent (IRD)is included in the decedent's final income tax return.

Accepted Answer

A) True 
 B)False  False

Question 2

Identify which of the following statements is true.

Accepted Answer

A) In a complex trust,distributable net income (DNI)does not act as a ceiling on the amount of the distribution deduction. 
B) Distributable net income (DNI)is not reduced by the charitable contribution deduction when calculating the deductible discretionary distributions for a complex trust. 
C) In a complex trust,distributable net income (DNI)is not reduced by the charitable contribution deduction when comparing DNI with the mandatory distributions in order to determine the amount of the distribution deduction. 
D) All of the above are false. 
A) In a complex trust,distributable net income (DNI)does not act as a ceiling on the amount of the distribution deduction. 
B) Distributable net income (DNI)is not reduced by the charitable contribution deduction when calculating the deductible discretionary distributions for a complex trust. 
C) In a complex trust,distributable net income (DNI)is not reduced by the charitable contribution deduction when comparing DNI with the mandatory distributions in order to determine the amount of the distribution deduction. 
D) All of the above are false. C

Question 3

A simple trust has a distributable net income (DNI)of $50,000 and net accounting income of $60,000,all from taxable sources.The trust has a sole beneficiary,Marty.The trust reports on a calendar tax year and distributes the $60,000 of 2008's net accounting income to Marty on January 20,2009.No other distributions are made in the current year.Marty's taxable income from the trust this year is

Accepted Answer

A) $0. 
B) $49,700. 
C) $50,000. 
D) $60,000. 
A) $0. 
B) $49,700. 
C) $50,000. 
D) $60,000. C

Question 4

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

Accepted Answer

($10,000/$30,000)× $3,000 = $1

Question 5

The governing instrument for the Lopez Trust contains no definitions of income and principal.The Trust is located in a state that has adopted the Uniform Act.In the current year,the trust reports the following receipts and disbursements:   
What is the trust's net accounting income?

Accepted Answer

$10,000 - $500 - $200 = $9,300

Question 6

What is the benefit of the 65-day rule?

Accepted Answer

The benefit of the 65-day rule is that i

Question 7

Describe the tier system for trust beneficiaries.

Accepted Answer

The tier system distinguishes between ma

Question 8

In the year of termination,a trust incurs a $20,000 NOL.In addition,it has a $30,000 NOL carryover from the two preceding tax years.The trust distributes 40% of its assets to Sam,30% of its assets to Alex,and 30% of its assets to Catherine.How much of the NOL can Sam (who has $150,000 of gross income)deduct on his return in the year that the trust terminates?

Accepted Answer

($20,000 +

Question 9

A trust has net accounting income and distributable net income (DNI)of $60,000,all from taxable sources.The trustee is required to distribute $40,000 of current income to Harry.In addition,the trustee makes a discretionary distribution to Harry of $10,000 and a discretionary distribution to Susan of $30,000.$20,000 of the $40,000 total discretionary distributions is from corpus.Gross income reportable by Harry is

Accepted Answer

A) $50,000. 
B) $45,000. 
C) $37,500. 
D) $30,000. 
A) $50,000. 
B) $45,000. 
C) $37,500. 
D) $30,000.

Question 10

A simple trust

Accepted Answer

A) may make charitable distributions. 
B) may make discretionary distributions of principal. 
C) may accumulate income. 
D) is required to distribute all of its income currently. 
A) may make charitable distributions. 
B) may make discretionary distributions of principal. 
C) may accumulate income. 
D) is required to distribute all of its income currently.

Question 11

This year,the Huang Trust received $20,000 of dividends and $30,000 of tax-free interest.It distributes all of its receipts to its beneficiary.How should the beneficiary treat the distribution?

Accepted Answer

The beneficiary is deemed to r

Question 12

Melody Trust has $60,000 of DNI for the current year,$20,000 of rental income and $40,000 of corporate bond interest.The trust instrument requires the trustee to distribute 30% of the trust income to Lee and 70% to Sarah,annually.The trust instrument does not require an allocation of the different types of income to the two beneficiaries.What is the amount and composition of the income reported by Lee and Sarah,respectively?

Accepted Answer

Lee reports $18,000 (30% of $60,000)of t

Question 13

Sukdev Basi funded an irrevocable simple trust in May 2008.The trust benefits Sukdev's son for life and grandson upon the son's death.One of the assets he transferred to the trust was Jetco stock,which had an FMV on the transfer date of $40,000.Sukdev's basis in the stock was $44,000,and he paid no gift tax on the transfer.The stock's value has dropped to $33,000,and the trustee thinks that now,October 2011,might be the time to sell the stock and take the loss deduction.For 2011,the trust will have $20,000 of income exclusive of any gain or loss.Sukdev's taxable income is approximately $15,000.What tax and nontax issues should the trustee consider concerning the possible sale of the stock?

Accepted Answer

Sukdev transferred depreciated property

Question 14

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 15

Identify which of the following statements is false.

Accepted Answer

A) State trust law preempts the trust document when defining income. 
B) The Uniform Act on principal and income requires depreciation to be charged against income. 
C) A statement in the trust instrument concerning the allocation of depreciation to principal or income overrides a provision of state law. 
D) The Uniform Act allocates royalties to both principal and income. 
A) State trust law preempts the trust document when defining income. 
B) The Uniform Act on principal and income requires depreciation to be charged against income. 
C) A statement in the trust instrument concerning the allocation of depreciation to principal or income overrides a provision of state law. 
D) The Uniform Act allocates royalties to both principal and income.

Question 16

Identify which of the following statements is false.

Accepted Answer

A) Federal estate taxes related to income in respect of a decedent (IR
D) is deductible by the estate in the year the IRD is includible in the estate's gross income. 
B) An example of deductions in respect of a decedent (DR
D) are property taxes that accrued prior to the decedent's death but were not paid until after death. 
C) Items of IRD receive a step-up in basis as a result of the decedent's death. 
D) Interest earned but not received before death is IRD. 
A) Federal estate taxes related to income in respect of a decedent (IR
D) is deductible by the estate in the year the IRD is includible in the estate's gross income. 
B) An example of deductions in respect of a decedent (DR
D) are property taxes that accrued prior to the decedent's death but were not paid until after death. 
C) Items of IRD receive a step-up in basis as a result of the decedent's death. 
D) Interest earned but not received before death is IRD.

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

List some common examples of principal and income items.

Accepted Answer

A common example of principal

Question 19

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 20

A client asks about the relevance of state law in classifying items as principal or income.Explain the relevance.

Accepted Answer

In general,state law controls;

Income in respect of a decedent (IRD)is included in the decedent's final income tax return.

Identify which of the following statements is true.

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

The governing instrument for the Lopez Trust contains no definitions of income and principal.The Trust is located in a state that has adopted the Uniform Act.In the current year,the trust reports the following receipts and disbursements: What is the trust's net accounting income?

What is the benefit of the 65-day rule?

Describe the tier system for trust beneficiaries.

A simple trust

This year,the Huang Trust received $20,000 of dividends and $30,000 of tax-free interest.It distributes all of its receipts to its beneficiary.How should the beneficiary treat the distribution?

Identify which of the following statements is false.

Identify which of the following statements is false.

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.

List some common examples of principal and income items.

Identify which of the following statements is false.

A client asks about the relevance of state law in classifying items as principal or income.Explain the relevance.

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

Income in respect of a decedent (IRD)is included in the decedent's final income tax return.

Identify which of the following statements is true.

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

The governing instrument for the Lopez Trust contains no definitions of income and principal.The Trust is located in a state that has adopted the Uniform Act.In the current year,the trust reports the following receipts and disbursements: What is the trust's net accounting income?

What is the benefit of the 65-day rule?

Describe the tier system for trust beneficiaries.

A simple trust

This year,the Huang Trust received $20,000 of dividends and $30,000 of tax-free interest.It distributes all of its receipts to its beneficiary.How should the beneficiary treat the distribution?

Identify which of the following statements is false.

Identify which of the following statements is false.

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.

List some common examples of principal and income items.

Identify which of the following statements is false.

A client asks about the relevance of state law in classifying items as principal or income.Explain the relevance.

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