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Exam 20: Income Taxation of Trusts and Estates

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Question 61

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The Code defines a "simple trust" as which of the following?

A) One which is allowed to file Form 1041-EZ.
B) One which has only one income beneficiary.
C) One which must distribute its accounting income every year.
D) One whose grantor was a living individual.

E) None of the above
F) C) and D)

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Question 62

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Beginning with its ____________________ tax year,an estate must remit quarterly Federal estimated income tax payments. or

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Question 63

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A gift to charity from its 2012 income is deductible on an estate's Form 1041 if it is made by the end of the ____________________ tax year.

The Code defines a grantor trust as which of the following?

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 $20,000 to Roger and $20,000 to Sally.After paying 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 $50,000 to Sally.How much gross income from the trust must Roger recognize?

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?

A single trust that is operated independently for each of its three beneficiaries might be taxed using the ____________________ rule.

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?

The Moot Trust distributes an asset to its income beneficiary that shows a realized gain.What are the Federal income tax consequences of the distribution? What if the asset shows a realized loss?

The exempt interest income of a trust usually is allocable to ____________________ beneficiaries.

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

An example of income in respect of a decedent is the taxpayer's last paycheck,uncollected at death.

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

The grantor of a trust generally designates both ____________________ and ____________________ beneficiaries under the controlling agreement. or

Under the Federal income tax rules for fiduciary entities,a(n)____________________ generally must use a calendar tax year,but a(n)____________________can select any tax year-end.

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:

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

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

The Raven Trust was terminated this year and David,the beneficiary of the corpus,received all of the trust assets.The trust had a $10,000 net operating loss;this was the only tax year in which the trust operated a business.The entity has one income beneficiary,Flo.As a result of these transactions:

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?