Question 1

A fiduciary assigns its tax credits to beneficiaries corresponding to the disposition of its ____________________ for the year.

Accepted Answer

The answer of A fiduciary assigns its tax credits to...

Question 2

The IRS encourages ____________________ filing for Forms 1041.

Accepted Answer

The answer of The IRS encourages ____________________ filing for Forms...

Question 3

A fiduciary entity computes its alternative minimum tax in a manner similar to that used for a(n) ____________________.

Accepted Answer

The answer of A fiduciary entity computes its alternative minimum...

Question 4

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 of net tax-exempt income.

Accepted Answer

A) True 
 B)False

Question 5

Beneficiary information concerning a trust's income and distributions are conveyed on Schedule ____________________ of the Form 1041.

Accepted Answer

The answer of Beneficiary information concerning a trust's income and...

Question 6

The Willa estate reports $100,000 DNI, composed of $50,000 dividends, $20,000 taxable interest, $10,000 passive income, and $20,000 tax-exempt interest.Willa's two noncharitable income beneficiaries, Shanna and Tom, receive distributions of $75,000 each.How much of each class of income is deemed to have been distributed to Shanna? To Tom? Use the following template to structure your answer.

Accepted Answer

The answer of The Willa estate reports $100,000 DNI, composed...

Question 7

Remainder beneficiary Shelley receives a $50,000 net operating loss carryover when the Malone Trust terminates. Shelley deducts this amount ____________________ (for/from) AGI on her Form 1040.

Accepted Answer

The answer of Remainder beneficiary Shelley receives a $50,000 net...

Question 8

Harry, the sole income beneficiary, received a $40,000 distribution from the Lucy Trust, in a year when the trust's distributable net income was $30,000.Harry's AGI can increase by as much as $40,000.

Accepted Answer

A) True 
 B)False

Question 9

The Ulrich Trust has distributable net income (DNI) for the year of $100,000 and no income from tax-exempt sources.Under the terms of the trust instrument, the trustee must distribute $60,000 to Roger and $60,000 to Sally.After paying these amounts, the trustee is empowered to make additional distributions at its discretion.Exercising this authority, the Ulrich trustee distributes an additional $15,000 to Roger and $15,000 to Sally.How much gross income from the trust must Roger recognize?

Accepted Answer

A) $15,000. 
B) $50,000. 
C) $60,000. 
D) $75,000. 
A) $15,000. 
B) $50,000. 
C) $60,000. 
D) $75,000.

Question 10

A complex trust automatically is exempt from the Federal AMT.

Accepted Answer

A) True 
 B)False

Question 11

A ____________________ tier distribution is one that the trust agreement requires to be made by the trustee to the income beneficiary.
or

Accepted Answer

The answer of A ____________________ tier distribution is one that...

Question 12

A complex trust pays tax on the income that it retains and adds to corpus.

Accepted Answer

A) True 
 B)False

Question 13

Judy can claim one-third of the Sweet Estate's cost recovery deductions, because she received one-third of the fiduciary's distributable net income (DNI).

Accepted Answer

A) True 
 B)False

Question 14

A fiduciary's distribution deduction shifts the tax burden for current-year income from the entity to the beneficiary.

Accepted Answer

A) True 
 B)False

Question 15

The Leonardo Estate operates a business and generates cost recovery deductions. Which taxpayer(s), if any, can deduct these items, e.g., the deceased, the estate, the income or remainder beneficiaries?

Accepted Answer

If the fiduciary entity is operating a t

Question 16

In the year in which an estate terminates, its beneficiaries receive and can use as their own any unexpired NOL carryforwards proportionately to the corpus assets that they received.

Accepted Answer

A) True 
 B)False

Question 17

To reduce trustee commissions, the Sigrid Trust is operated as though it were two trusts (i.e., with 70-year-old Grandma and 7-year old Skippy each holding equal shares).This year the trust generated distributable net income (DNI) of $80,000.The Sigrid trustee distributed $100,000 to Grandma this year: $40,000 as her one-half share of the entity's income, and $60,000 as a distribution of principal.Skippy received no distribution. How much of the year's distributable net income is assigned to Grandma?

Accepted Answer

A) $40,000. 
B) $50,000. 
C) $80,000. 
D) $100,000. 
A) $40,000. 
B) $50,000. 
C) $80,000. 
D) $100,000.

Question 18

The Zhao Estate generated distributable net income (DNI) this year of $100,000, one-fourth of which was tax-exempt interest, and the balance of which was long-term capital gain.Kyle Zhao, the sole income beneficiary of the estate, received a distribution of the entire $125,000 accounting income of the entity.How does Kyle report the distribution?

Accepted Answer

A) $75,000 long-term capital gain, $25,000 exempt interest. 
B) $50,000 long-term capital gain, $50,000 exempt interest. 
C) $75,000 long-term capital gain, $25,000 ordinary income. 
D) $93,750 long-term capital gain, $31,250 exempt interest. 
A) $75,000 long-term capital gain, $25,000 exempt interest. 
B) $50,000 long-term capital gain, $50,000 exempt interest. 
C) $75,000 long-term capital gain, $25,000 ordinary income. 
D) $93,750 long-term capital gain, $31,250 exempt interest.

Question 19

The Doyle Trust reports distributable net income for the year of $100,000 and no income from tax-exempt sources.Under the terms of the trust instrument, the trustee must distribute $30,000 to Roger and $30,000 to Sally.After payment of these amounts, the trustee is empowered to make additional distributions at its discretion.Exercising this authority, the trustee distributes an additional $25,000 to Roger and $25,000 to Sally.How much income from the trust must Sally recognize?

Accepted Answer

A) $25,000. 
B) $30,000. 
C) $50,000. 
D) $55,000. 
A) $25,000. 
B) $30,000. 
C) $50,000. 
D) $55,000.

Question 20

"First-tier distributions" allowed by the will or trust document are made at the discretion of the executor or trustee.

Accepted Answer

A) True 
 B)False

Exam 28: Income Taxation of Trusts and Estates

A fiduciary assigns its tax credits to beneficiaries corresponding to the disposition of its ____________________ for the year.

The IRS encourages ____________________ filing for Forms 1041.

A fiduciary entity computes its alternative minimum tax in a manner similar to that used for a(n) ____________________.

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 of net tax-exempt income.

Beneficiary information concerning a trust's income and distributions are conveyed on Schedule ____________________ of the Form 1041.

Remainder beneficiary Shelley receives a $50,000 net operating loss carryover when the Malone Trust terminates. Shelley deducts this amount ____________________ (for/from) AGI on her Form 1040.

Harry, the sole income beneficiary, received a $40,000 distribution from the Lucy Trust, in a year when the trust's distributable net income was $30,000.Harry's AGI can increase by as much as $40,000.

A complex trust automatically is exempt from the Federal AMT.

A ____________________ tier distribution is one that the trust agreement requires to be made by the trustee to the income beneficiary. or

A complex trust pays tax on the income that it retains and adds to corpus.

Judy can claim one-third of the Sweet Estate's cost recovery deductions, because she received one-third of the fiduciary's distributable net income (DNI).

A fiduciary's distribution deduction shifts the tax burden for current-year income from the entity to the beneficiary.

The Leonardo Estate operates a business and generates cost recovery deductions. Which taxpayer(s), if any, can deduct these items, e.g., the deceased, the estate, the income or remainder beneficiaries?

In the year in which an estate terminates, its beneficiaries receive and can use as their own any unexpired NOL carryforwards proportionately to the corpus assets that they received.

"First-tier distributions" allowed by the will or trust document are made at the discretion of the executor or trustee.

An Introduction to Taxation and Understanding the Federal Tax Law

Working With the Tax Law

Computing the Tax

Gross Income: Concepts and Inclusions

Gross Income: Exclusions

Deductions and Losses: in General

Deductions and Losses: Certain Business Expenses and Losses

Depreciation, Cost Recovery, Amortization, and Depletion

Deductions: Employee and Self-Employed Related Expenses

Deductions and Losses: Certain Itemized Deductions

Investor Losses

Tax Credits and Payments

A: Property Transactions: Determination of Gain or Loss, Basis Considerations, and Nontaxable Exchanges-Part 1

Property Transactions: Determination of Gain or Loss, Basis Considerations, and Nontaxable Exchanges-Part 2

Property Transactions: Capital Gains and Losses, 1231, Recapture Provisions

Alternative Minimum Tax

Accounting Periods and Methods

Corporations: Introduction and Operating Rules

Corporations: Organization and Capital Structure

Corporations: Distributions Not in Complete Liquidation

Corporations: Distributions in Complete Liquidation and an Overview of Reorganizations

Partnerships

S: Corporations

Exempt Entities

Multistate Corporate Taxation

Taxation of International Transactions

Tax Practice and Ethics

Filters