Question 1

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?

Accepted Answer

By default (i.e., no election is made), ...

Question 2

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 3

When a beneficiary receives a distribution from a trust of an asset other than cash, the realized loss generally is ____________________ (recognized, not recognized) by the trust.

Accepted Answer

not recognized

Question 4

List and discuss the three major functions of distributable net income (DNI) as that amount is used under Federal income tax law.

Accepted Answer

.DNI determines the maximum amount that ...

Question 5

When a beneficiary receives a distribution from a trust of an asset other than cash, generally a(n) ____________________ basis is assigned to the asset.

Accepted Answer

The answer of When a beneficiary receives a distribution from...

Question 6

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

Accepted Answer

income, re...

Question 7

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

Accepted Answer

third (for tax years that end two or mor...

Question 8

Tax planning usually dictates that high-income and high-wealth individuals be specified as second-tier beneficiaries of a trust arrangement.

Accepted Answer

A) True 
 B)False

Question 9

For each of the following independent statements, choose the best answer.
-For a calendar-year entity, the Form 1041 has an unextended due date of April 15.

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

Question 10

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 11

Usually, a beneficiary takes a carryover basis when a trust distributes a non-cash asset.

Accepted Answer

A) True 
 B)False

Question 12

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

Accepted Answer

K-1

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

Generally, an administrative expense attributable to municipal bond interest should be claimed on the estate's Form 706.

Accepted Answer

A) True 
 B)False

Question 15

With respect to a trust, the terms creator, donor, and grantor are synonyms.

Accepted Answer

A) True 
 B)False

Question 16

Marcus has been determined to be a grantor trust by the IRS. Your partner explains that this probably happened because the donor of the trust assets retained excessive powers over the operation of the trust or the use of its assets and income. To what powers is your partner referring?

Accepted Answer

One or more of the following conditions ...

Question 17

A complex trust pays tax on the income that it accumulates (i.e., that it does not distribute).

Accepted Answer

A) True 
 B)False

Question 18

Which of the following taxpayers use a Schedule K and K-1 to pass through income, loss, and credit amounts to the owners or beneficiaries?

Accepted Answer

A)  Complex trust.
B)  Partnership.
C)  S corporation.
D)  All of the above taxpayers use Schedules K and K-1.E) B) and C)
F) None of the above D

Question 19

For each of the following independent statements, choose the best answer.
-The entity's AMT preferences and adjustments pass through to the income 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) None of the above
F) A) and B)

Question 20

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) B) and D)
K) A) and D)

Exam 20: Income Taxation of Trusts and Estates

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?

Correct AnswerverifiedBy default (i.e., no election is made), ...View AnswerShow 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

When a beneficiary receives a distribution from a trust of an asset other than cash, the realized loss generally is ____________________ (recognized, not recognized) by the trust.

Correct Answerverifiednot recognized

List and discuss the three major functions of distributable net income (DNI) as that amount is used under Federal income tax law.

Correct Answerverified.DNI determines the maximum amount that ...View AnswerShow Answer

When a beneficiary receives a distribution from a trust of an asset other than cash, generally a(n) ____________________ basis is assigned to the asset.

Correct AnswerverifiedShow Answer

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

Correct Answerverifiedincome, re...View AnswerShow Answer

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

Correct Answerverifiedthird (for tax years that end two or mor...View AnswerShow Answer

Tax planning usually dictates that high-income and high-wealth individuals be specified as second-tier beneficiaries of a trust arrangement.

Correct AnswerverifiedShow Answer

For each of the following independent statements, choose the best answer. -For a calendar-year entity, the Form 1041 has an unextended due date of April 15.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Usually, a beneficiary takes a carryover basis when a trust distributes a non-cash asset.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedK-1

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

Correct AnswerverifiedShow Answer

Generally, an administrative expense attributable to municipal bond interest should be claimed on the estate's Form 706.

Correct AnswerverifiedShow Answer

With respect to a trust, the terms creator, donor, and grantor are synonyms.

Correct AnswerverifiedShow Answer

Marcus has been determined to be a grantor trust by the IRS. Your partner explains that this probably happened because the donor of the trust assets retained excessive powers over the operation of the trust or the use of its assets and income. To what powers is your partner referring?

Correct AnswerverifiedOne or more of the following conditions ...View AnswerShow Answer

A complex trust pays tax on the income that it accumulates (i.e., that it does not distribute).

Correct AnswerverifiedShow Answer

Which of the following taxpayers use a Schedule K and K-1 to pass through income, loss, and credit amounts to the owners or beneficiaries?

Correct AnswerverifiedD

For each of the following independent statements, choose the best answer. -The entity's AMT preferences and adjustments pass through to the income 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 is taxed to the donor, not the beneficiaries.

Correct AnswerverifiedShow Answer

Correct Answer
verified
By default (i.e., no election is made), ...
View Answer

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

Correct Answer
verified
not recognized

Correct Answer
verified
.DNI determines the maximum amount that ...
View Answer

Correct Answer
verified

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

Correct Answer
verified
income, re...
View Answer

Correct Answer
verified
third (for tax years that end two or mor...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
K-1

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
One or more of the following conditions ...
View Answer

Correct Answer
verified

Correct Answer
verified
D

Correct Answer
verified

Correct Answer
verified