Question 1

Outline the classification of principal and income under the Revised Uniform Principal and Income Act.

Accepted Answer

Income account:
Income: rent,interest,di

Question 2

A trust must distribute all of its income annually.Capital gains are allocated to principal.The trust has dividend income of $12,000,capital gains of $6,000,and no expenses.Calculate the trust's taxable income.

Accepted Answer

$6,000 - $

Question 3

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 4

Describe the double taxation of income in respect of a decedent and how it can be reduced.

Accepted Answer

The taxable estate contains all income e

Question 5

Identify which of the following statements is false.

Accepted Answer

A) A conduit approach-that is,the income has the same character in the hands of the beneficiary as it has to the trust-governs for fiduciary income taxation. 
B) Essentially,an estate or trust is taxed on any income it earns,whether retained or distributed. 
C) Many of the same rules that determine the calculation of taxable income for individuals apply to trusts. 
D) Trusts receive a personal exemption. 
A) A conduit approach-that is,the income has the same character in the hands of the beneficiary as it has to the trust-governs for fiduciary income taxation. 
B) Essentially,an estate or trust is taxed on any income it earns,whether retained or distributed. 
C) Many of the same rules that determine the calculation of taxable income for individuals apply to trusts. 
D) Trusts receive a personal exemption.

Question 6

The conduit approach for fiduciary income tax means

Accepted Answer

A) the distributed income has the same character in the hands of the beneficiary as it has to the trust. 
B) the distributed income goes to all beneficiaries proportionately. 
C) the distributed income is determined by the trustee annually. 
D) the distributed income of a remainder interest is determined by the property. 
A) the distributed income has the same character in the hands of the beneficiary as it has to the trust. 
B) the distributed income goes to all beneficiaries proportionately. 
C) the distributed income is determined by the trustee annually. 
D) the distributed income of a remainder interest is determined by the property.

Question 7

A trust has the following results:
 
The Uniform Act is followed.The trust document requires one-fifth of the income to be distributed annually to David and the remainder of the income to Patty.What is distributable net income?

Accepted Answer

A) $74,000 
B) $72,000 
C) $64,000 
D) $62,000 
A) $74,000 
B) $72,000 
C) $64,000 
D) $62,000

Question 8

Explain the three functions of distributable net income (DNI).

Accepted Answer

DNI establishes the maximum amount on wh

Question 9

The $3,000 limitation on deducting net capital losses does not apply to a trust.

Accepted Answer

A) True 
 B)False

Question 10

An example of income in respect to a decedent (IRD)for a cash method of accounting taxpayer is

Accepted Answer

A) interest earned but not received prior to death. 
B) salary earned but not received prior to death. 
C) gain from an installment sale entered into before death. 
D) All of the above are examples. 
A) interest earned but not received prior to death. 
B) salary earned but not received prior to death. 
C) gain from an installment sale entered into before death. 
D) All of the above are examples.

Question 11

Which of the following is not an addition to trust taxable income when computing distributable net income (DNI)?

Accepted Answer

A) distribution deduction 
B) capital gains allocated to principal 
C) tax-exempt interest 
D) personal exemption 
A) distribution deduction 
B) capital gains allocated to principal 
C) tax-exempt interest 
D) personal exemption

Question 12

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 13

A trust document does not mention the treatment for depreciation.The state has adopted the Uniform Act.The trust document states that depreciation is a charge against corpus.The trust results are the following:   
Calculate net accounting income.

Accepted Answer

$2,000 + $

Question 14

A tax entity,often called a fiduciary,includes all of the following except

Accepted Answer

A) estates. 
B) complex trusts. 
C) testamentary trusts. 
D) All of the above are fiduciaries. 
A) estates. 
B) complex trusts. 
C) testamentary trusts. 
D) All of the above are fiduciaries.

Question 15

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 16

A trust has net accounting income of $15,000.In addition,the trust has a $10,000 capital gain,which is not included in net accounting income.The trust is required to distribute the trust income to the beneficiary.The beneficiary will receive

Accepted Answer

A) $10,000. 
B) $15,000. 
C) $24,700. 
D) $25,000. 
A) $10,000. 
B) $15,000. 
C) $24,700. 
D) $25,000.

Question 17

Explain how to determine the deductible portion of trustee's fees.

Accepted Answer

If the trust has any tax-exempt income,o

Question 18

Identify which of the following statements is true.

Accepted Answer

A) An individual cannot be both a tier-1 and tier-2 beneficiary in the same year. 
B) Tier-2 beneficiaries potentially can receive more favorable tax treatment than tier-1 beneficiaries. 
C) Bequests of specific sums of money when distributed out of an estate result in the recognition of gross income by the beneficiary receiving the bequest. 
D) All of the above are false. 
A) An individual cannot be both a tier-1 and tier-2 beneficiary in the same year. 
B) Tier-2 beneficiaries potentially can receive more favorable tax treatment than tier-1 beneficiaries. 
C) Bequests of specific sums of money when distributed out of an estate result in the recognition of gross income by the beneficiary receiving the bequest. 
D) All of the above are false.

Question 19

Martha died and by her will,specifically bequeathed,and the executor distributed,$20,000 cash and a $70,000 house to Harold.The distributions were made in a year in which the estate had $65,000 of DNI,all from taxable sources.The maximum Harold will be required to report as gross income as a result of these distributions is

Accepted Answer

A) $0. 
B) $20,000. 
C) $65,000. 
D) $70,000. 
A) $0. 
B) $20,000. 
C) $65,000. 
D) $70,000.

Question 20

Little Trust,whose trust instrument is silent with respect to depreciation,collects rental income of $20,000 and pays property taxes of $1,000.Depreciation expense is $5,000.
Little Trust is in a state where all depreciation is charged to principal.What is the trust's net accounting income?

Accepted Answer

$20,000 -

Outline the classification of principal and income under the Revised Uniform Principal and Income Act.

A trust must distribute all of its income annually.Capital gains are allocated to principal.The trust has dividend income of $12,000,capital gains of $6,000,and no expenses.Calculate the trust's taxable income.

Describe the double taxation of income in respect of a decedent and how it can be reduced.

Identify which of the following statements is false.

The conduit approach for fiduciary income tax means

A trust has the following results: The Uniform Act is followed.The trust document requires one-fifth of the income to be distributed annually to David and the remainder of the income to Patty.What is distributable net income?

Explain the three functions of distributable net income (DNI).

The $3,000 limitation on deducting net capital losses does not apply to a trust.

An example of income in respect to a decedent (IRD)for a cash method of accounting taxpayer is

Which of the following is not an addition to trust taxable income when computing distributable net income (DNI)?

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 document does not mention the treatment for depreciation.The state has adopted the Uniform Act.The trust document states that depreciation is a charge against corpus.The trust results are the following: Calculate net accounting income.

A tax entity,often called a fiduciary,includes all of the following except

Identify which of the following statements is true.

A trust has net accounting income of $15,000.In addition,the trust has a $10,000 capital gain,which is not included in net accounting income.The trust is required to distribute the trust income to the beneficiary.The beneficiary will receive

Explain how to determine the deductible portion of trustee's fees.

Identify which of the following statements is true.

Little Trust,whose trust instrument is silent with respect to depreciation,collects rental income of $20,000 and pays property taxes of $1,000.Depreciation expense is $5,000. Little Trust is in a state where all depreciation is charged to principal.What is the trust's net accounting income?

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

Outline the classification of principal and income under the Revised Uniform Principal and Income Act.

A trust must distribute all of its income annually.Capital gains are allocated to principal.The trust has dividend income of $12,000,capital gains of $6,000,and no expenses.Calculate the trust's taxable income.

Describe the double taxation of income in respect of a decedent and how it can be reduced.

Identify which of the following statements is false.

The conduit approach for fiduciary income tax means

A trust has the following results: The Uniform Act is followed.The trust document requires one-fifth of the income to be distributed annually to David and the remainder of the income to Patty.What is distributable net income?

Explain the three functions of distributable net income (DNI).

The $3,000 limitation on deducting net capital losses does not apply to a trust.

An example of income in respect to a decedent (IRD)for a cash method of accounting taxpayer is

Which of the following is not an addition to trust taxable income when computing distributable net income (DNI)?

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 document does not mention the treatment for depreciation.The state has adopted the Uniform Act.The trust document states that depreciation is a charge against corpus.The trust results are the following: Calculate net accounting income.

A tax entity,often called a fiduciary,includes all of the following except

Identify which of the following statements is true.

A trust has net accounting income of $15,000.In addition,the trust has a $10,000 capital gain,which is not included in net accounting income.The trust is required to distribute the trust income to the beneficiary.The beneficiary will receive

Explain how to determine the deductible portion of trustee's fees.

Identify which of the following statements is true.

Little Trust,whose trust instrument is silent with respect to depreciation,collects rental income of $20,000 and pays property taxes of $1,000.Depreciation expense is $5,000. Little Trust is in a state where all depreciation is charged to principal.What is the trust's net accounting income?

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