Question 1

For each of the following items, insert the best term or phrase. An answer choice may be used more than once, but only one choice is the best for each descriptive phrase.
-An estate always is created upon the death of this party.

Accepted Answer

A)  Complex
B)  Decedent
C)  Executor
D)  Grantor
E)  LivingF) ReversionaryG) SimpleH) SprinklingI) TrusteeJ) A) and G)
K) A) and D)

Question 2

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.

Accepted Answer

A) True 
 B)False

Question 3

The Yan Estate is your client, as are many of the decedent's family members. Determine the tax effects of the indicated losses for the Yan Estate for both tax years. The estate holds a variety of investment assets, which it received from the decedent, Mrs. Yan. The estate's sole income and remainder beneficiary is Yan, Jr.
Tax Year Loss Generated
2015 (first tax year) Taxable income ($300)
Capital loss ($20,000)
2016 (final tax year) Taxable income ($40,000)

Accepted Answer

2015 ^No^flow-through^of^either^the^negative^taxable^income^or^the^capital^loss^incurred.^The^$300 negative taxable income, due solel...

Question 4

One­fourth of the Cruger Estate's distributable net income consists of net long­term capital gains. Thus, when income beneficiary Susie receives a $40,000 income distribution from the estate, $10,000 of it qualifies for the 15%/20% tax rate.

Accepted Answer

A) True 
 B)False

Question 5

This year, the Nano Trust reported $50,000 entity accounting income and $40,000 distributable net income (DNI) . Nano distributed $30,000 cash to Horatio, its sole income beneficiary. Nano is a complex trust. Nano's distribution deduction is:

Accepted Answer

A)   $50,000.
B)   $40,000.
C)   $30,000.
D)   $0. Because the distributions of a complex trust are discretionary, no deduction is allowed.E) A) and C)
F) All of the above

Question 6

Like a corporation, the fiduciary reports and pays its own Federal income tax liability.

Accepted Answer

A) True 
 B)False

Question 7

The trust usually makes a distribution to the income beneficiaries in the amount of its fiduciary
____________________ income.

Accepted Answer

The answer of The trust usually makes a distribution to...

Question 8

Which of the following is the annual maximum amount to be included as gross income by all of the income beneficiaries of the trust or estate?

Accepted Answer

A)   Entity taxable income.
B)   Entity adjusted gross income.
C)   Distributable net income.
D)   Fiduciary accounting income.E) All of the above
F) B) and D) C

Question 9

For each of the following items, insert the best term or phrase. An answer choice may be used more than once, but only one choice is the best for each descriptive phrase.
-A trust whose income is taxed to the donor, not the beneficiaries.

Accepted Answer

A)  Complex
B)  Decedent
C)  Executor
D)  Grantor
E)  LivingF) ReversionaryG) SimpleH) SprinklingI) TrusteeJ) C) and I)
K) A) and H)

Question 10

For each of the following items, insert the best term or phrase. An answer choice may be used more than once, but only one choice is the best for each descriptive phrase.
-A trust whose income can be distributed to beneficiaries and in amounts at the trustee's discretion.

Accepted Answer

A)  Complex
B)  Decedent
C)  Executor
D)  Grantor
E)  LivingF) ReversionaryG) SimpleH) SprinklingI) TrusteeJ) D) and H)
K) A) and I)

Question 11

The Prakash Trust is required to pay its entire annual accounting income to the Daytona Museum, a qualifying charity. The trust's personal exemption is:

Accepted Answer

A)   $0.
B)   $100.
C)   $300.
D)   $600.E) A) and B)
F) A) and C) C

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

In computing distributable net income (DNI) for a trust, one removes any net capital gain or loss that is allocable to income.

Accepted Answer

A) True 
 B)False

Question 14

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 current­year 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?

Accepted Answer

A)   Distribute the land to Eddie and make a § 643(e)  election.
B)   Distribute the land to Eddie and make no § 643(e)  election.
C)   Sell the land to a third party.
D)   Neither sell nor distribute the land.E) B) and C)
F) A) and C)

Question 15

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

Accepted Answer

A) True 
 B)False

Question 16

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

Accepted Answer

A)   File the entity's state and Federal income tax returns.
B)   Invest the assets that comprise the corpus of the entity.
C)   Distribute entity accounting income to the beneficiaries in accordance with the provisions of the trust instrument.
D)   All of the above.E) All of the above
F) C) and D) D

Question 17

Does the estate or trust's distributable net income always equal its deduction for distributions to beneficiaries? Are the two amounts ever equal in amount? Answer for estates, simple trusts, and complex trusts.

Accepted Answer

The distribution deduction for an estate...

Question 18

Tax planning motivations usually predominate over other objectives in deciding whether to create a trust.

Accepted Answer

A) True 
 B)False

Question 19

You are responsible for the Federal income tax filings of the Tyrone Trust. Summarize the relevant due dates and filing requirements for Tyrone.

Accepted Answer

A Form 1041 is required if the estate or...

Question 20

For each of the following independent statements, choose the best answer.
-Distributable net income is used to account for distributions by the entity to its beneficiaries.

Accepted Answer

A)  Tax attribute of complex trusts only
B)  Tax attribute of estates only
C)  Tax attribute of estates and complex trusts
D)  Tax attribute of neither estates nor complex trustsE) C) and D)
F) All of the above

Exam 28: Income Taxation of Trusts and Estates

For each of the following items, insert the best term or phrase. An answer choice may be used more than once, but only one choice is the best for each descriptive phrase. -An estate always is created upon the death of this party.

Correct Answer
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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.

Correct Answer
verified

Correct Answer
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2015 ^No^flow-through^of^either^the^negative^taxable^income^or^the^capital^loss^incurred.^The^$300 negative taxable income, due solel...
View Answer

Onefourth of the Cruger Estate's distributable net income consists of net longterm capital gains. Thus, when income beneficiary Susie receives a $40,000 income distribution from the estate, $10,000 of it qualifies for the 15%/20% tax rate.

Correct Answer
verified

This year, the Nano Trust reported $50,000 entity accounting income and $40,000 distributable net income (DNI) . Nano distributed $30,000 cash to Horatio, its sole income beneficiary. Nano is a complex trust. Nano's distribution deduction is:

Correct Answer
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Like a corporation, the fiduciary reports and pays its own Federal income tax liability.

Correct Answer
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The trust usually makes a distribution to the income beneficiaries in the amount of its fiduciary ____________________ income.

Correct Answer
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Which of the following is the annual maximum amount to be included as gross income by all of the income beneficiaries of the trust or estate?

Correct Answer
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C

For each of the following items, insert the best term or phrase. An answer choice may be used more than once, but only one choice is the best for each descriptive phrase. -A trust whose income is taxed to the donor, not the beneficiaries.

Correct Answer
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For each of the following items, insert the best term or phrase. An answer choice may be used more than once, but only one choice is the best for each descriptive phrase. -A trust whose income can be distributed to beneficiaries and in amounts at the trustee's discretion.

Correct Answer
verified

The Prakash Trust is required to pay its entire annual accounting income to the Daytona Museum, a qualifying charity. The trust's personal exemption is:

Correct Answer
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C

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

Correct Answer
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In computing distributable net income (DNI) for a trust, one removes any net capital gain or loss that is allocable to income.

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

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

Correct Answer
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D

Does the estate or trust's distributable net income always equal its deduction for distributions to beneficiaries? Are the two amounts ever equal in amount? Answer for estates, simple trusts, and complex trusts.

Correct Answer
verified
The distribution deduction for an estate...
View Answer

Tax planning motivations usually predominate over other objectives in deciding whether to create a trust.

Correct Answer
verified

You are responsible for the Federal income tax filings of the Tyrone Trust. Summarize the relevant due dates and filing requirements for Tyrone.

Correct Answer
verified
A Form 1041 is required if the estate or...
View Answer

For each of the following independent statements, choose the best answer. -Distributable net income is used to account for distributions by the entity to its beneficiaries.

Correct Answer
verified

Exam 28: Income Taxation of Trusts and Estates

For each of the following items, insert the best term or phrase. An answer choice may be used more than once, but only one choice is the best for each descriptive phrase. -An estate always is created upon the death of this party.

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedShow Answer

Correct Answerverified2015 No flow-through of either the negative taxable income or the capital loss incurred. The $300 negative taxable income, due solel...View AnswerShow Answer

One­fourth of the Cruger Estate's distributable net income consists of net long­term capital gains. Thus, when income beneficiary Susie receives a $40,000 income distribution from the estate, $10,000 of it qualifies for the 15%/20% tax rate.

Correct AnswerverifiedShow Answer

This year, the Nano Trust reported $50,000 entity accounting income and $40,000 distributable net income (DNI) . Nano distributed $30,000 cash to Horatio, its sole income beneficiary. Nano is a complex trust. Nano's distribution deduction is:

Correct AnswerverifiedShow Answer

Like a corporation, the fiduciary reports and pays its own Federal income tax liability.

Correct AnswerverifiedShow Answer

The trust usually makes a distribution to the income beneficiaries in the amount of its fiduciary ____________________ income.

Correct AnswerverifiedShow Answer

Which of the following is the annual maximum amount to be included as gross income by all of the income beneficiaries of the trust or estate?

Correct AnswerverifiedC

For each of the following items, insert the best term or phrase. An answer choice may be used more than once, but only one choice is the best for each descriptive phrase. -A trust whose income is taxed to the donor, not the beneficiaries.

Correct AnswerverifiedShow Answer

For each of the following items, insert the best term or phrase. An answer choice may be used more than once, but only one choice is the best for each descriptive phrase. -A trust whose income can be distributed to beneficiaries and in amounts at the trustee's discretion.

Correct AnswerverifiedShow Answer

The Prakash Trust is required to pay its entire annual accounting income to the Daytona Museum, a qualifying charity. The trust's personal exemption is:

Correct AnswerverifiedC

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

Correct AnswerverifiedShow Answer

In computing distributable net income (DNI) for a trust, one removes any net capital gain or loss that is allocable to income.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedD

Does the estate or trust's distributable net income always equal its deduction for distributions to beneficiaries? Are the two amounts ever equal in amount? Answer for estates, simple trusts, and complex trusts.

Correct AnswerverifiedThe distribution deduction for an estate...View AnswerShow Answer

Tax planning motivations usually predominate over other objectives in deciding whether to create a trust.

Correct AnswerverifiedShow Answer

You are responsible for the Federal income tax filings of the Tyrone Trust. Summarize the relevant due dates and filing requirements for Tyrone.

Correct AnswerverifiedA Form 1041 is required if the estate or...View AnswerShow Answer

For each of the following independent statements, choose the best answer. -Distributable net income is used to account for distributions by the entity to its beneficiaries.

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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2015 ^No^flow-through^of^either^the^negative^taxable^income^or^the^capital^loss^incurred.^The^$300 negative taxable income, due solel...
View Answer

Onefourth of the Cruger Estate's distributable net income consists of net longterm capital gains. Thus, when income beneficiary Susie receives a $40,000 income distribution from the estate, $10,000 of it qualifies for the 15%/20% tax rate.

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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C

Correct Answer
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Correct Answer
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Correct Answer
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C

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

Correct Answer
verified

Correct Answer
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D

Correct Answer
verified
The distribution deduction for an estate...
View Answer

Correct Answer
verified

Correct Answer
verified
A Form 1041 is required if the estate or...
View Answer

Correct Answer
verified