FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 20: Income Taxation of Trusts and Estates

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 31

True/False

Review LaterAdd Note

Review Later

The Griffin Trust makes a gift to a qualifying charity. Griffin's entity-level deduction is allowed only to the extent of 50% of distributable net income.

A) True
B) False

Correct Answer

verified

Show Answer

Question 32

Short Answer

Review LaterAdd Note

Review Later

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

Correct Answer

verified

Show Answer

Question 33

True/False

Review LaterAdd Note

When DNI includes exempt interest income, the beneficiary includes less than the full amount of DNI in current-year gross income.

The grantor set up a trust, income to a daughter, remainder to a grandson. To the extent that trust income is used to satisfy the grantor's legal obligation to pay for his daughter's high school education, Subchapter J rules are ignored, and the income is taxed to the grantor.

The Whitmer Trust operates a manufacturing business and distributes the profits to its income beneficiaries. Whitmer passes through to the income beneficiaries the data needed to compute their domestic production activities deduction.

If provided for in the controlling agreement, a trust might terminate when the income beneficiary graduates with a law degree.

The Chen Trust is required to distribute its accounting income every year, one-half to Missy Chen, and one-half to the local church's homeless shelter. What is the Chen Trust's personal exemption?

The IRS encourages ____________________ filing for Forms 1041.

The Gibson Estate is responsible for the income in respect of a decedent (IRD) of Juanita Gibson, the deceased. Define the term IRD and describe its treatment for Federal tax purposes

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 Clara?

Income in respect of a decedent can be subject to both income and estate tax at the Federal level.

The Drabb Trust owns a plot of business-related land, basis of $50,000, fair market value of $35,000. Drabb is subject to a 35% marginal income tax rate. Its sole beneficiary, Eddie, is subject to a 15% marginal income tax rate. Drabb's current-year distributable net income is $95,000. What is the most preferable action for the trustee of Drabb to take, considering only the related tax consequences?

The Jain Trust is required to pay its entire annual accounting income to Sam and Janet. The trust's personal exemption is:

Cost recovery deductions are assigned pro rata to the recipients of an estate's distributable net income (DNI).

List some of the most commonly encountered motivations for creating fiduciary entities.

The entity is a ___________________ trust if the grantor retains the power to revoke the trust.

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

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

Three months after Emma Timkin died, her executor received the final $10,000 installment of Emma's Super Lottery winnings from the state. Which of the following statements is true?

During the current year, the Santo Trust received $30,000 of taxable interest income, paid trustee's commissions of $3,000, and had no other income or expenses. The Santo trust instrument requires that $20,000 be paid annually to Marilyn, and $40,000 be paid annually to Domingo. How much gross income must Marilyn and Domingo recognize?