Exam 28: Income Taxation of Trusts and Estates

Jose is subject to the top marginal Federal income tax rates.Carlita is considering establishing a trust in which Jose would be an income beneficiary. Considering only income tax consequences, Jose should be designated as:

Generally, an estate's taxable income is computed in a manner similar to that used for a(n) ____________________.

The Suarez Trust generated distributable net income (DNI) this year of $150,000, one-third of which was portfolio income, and the balance of which was exempt interest.Under the terms of the trust, Clara Suarez is to receive an annual income distribution of $30,000.At the discretion of the trustee, additional distributions can be made to Clara, or to Clark Suarez III.This year, the trustee's distributions to Clara totaled $90,000.Clark also received $90,000.How much of the trust's DNI is assigned to Clark?

The trustee of the Miguel Trust can distribute any amount of accounting income and corpus to the trust's income beneficiaries, Paula and George.This year, the trust incurred the following. The trustee distributed $40,000 to Paula and $40,000 to George.

Consider the term fiduciary accounting income as it is used with respect to the Federal income taxation of trusts and estates. How is this amount computed? Where is it used in computing the parties' taxable incomes?

Which of the following taxpayers can be subject to an entity-level Federal income tax?

In computing Federal taxable income, can the trust or estate use its distributable net income (DNI) as its deduction for distributions to beneficiaries? Explain.

Corpus, principal, and assets of the trust are synonyms.

Which of the following is a typical duty of a trustee?

This year, the Nano Trust reported $50,000 entity accounting income and $40,000 distributable net income (DNI). Nano distributed $60,000 cash to Horatio, its sole income beneficiary. Nano is a simple trust. Nano's distribution deduction is:

Beneficiary Terry received $30,000 from the Urgent Trust.Trust accounting income for the year was $50,000.The trust generated $20,000 in cost recovery deductions.How much can Terry deduct with respect to the cost recovery deductions that Urgent generated?

Three weeks after Abed died, his brother Tony properly received Abed's last paycheck from his employer.The gross amount of the check was $4,000, and a $300 deduction for state income taxes was subtracted in computing the net amount of the payment.Which of the following statements is true?

A decedent's income in respect of a decedent is subject to the Federal income tax, but it is excluded from the estate tax.

Which of the following restrictions applies concerning distributions to trust beneficiaries?

In computing the Federal taxable income of a trust, the first step is to determine its ____________________ income.

The Julius Trust made a gift to the United Charity on April 1, Year Two, from its Year One business profits. The trust's charitable contribution deduction can be claimed in either Year One or Year Two.

The unextended due date for a calendar-year trust to file its Form 1041 is March 15.

The Bard Estate incurs a $25,000 fee in disposing of the real property of the decedent. The executor can decide to claim a $5,000 deduction against the Federal estate tax, and a $20,000 deduction on the estate's income tax return.

The tax rules regarding the income taxation of trusts and estates are included in which Subchapter of the Internal Revenue Code?

The Gable Trust reports $20,000 business income and $10,000 exempt interest income, and it paid a $3,000 fiduciary fee.Gable's distributable net income includes $10,000 for the interest income.