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Exam 28: Income Taxation of Trusts and Estates

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Question 41

True/False

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The first step in computing an estate's taxable income is the determination of its fiduciary accounting income for the year.

A) True
B) False

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Question 42

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An estate's remainder beneficiary generally must wait until the entity is terminated by the executor to receive any distributions.

A) True
B) False

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Question 43

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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 that can accumulate rather than distribute its accounting income.

For the year, the Uldis Trust has distributable net income (DNI) of $100,000 and no income from tax-exempt sources. Under the terms of the trust instrument, the trustee must distribute $75,000 to Roger and $75,000 to Sally. After paying these amounts, the trustee can make additional distributions at its discretion. Exercising this authority, the Uldis trustee distributes an additional $10,000 to Roger and $30,000 to Sally. How much gross income from the trust must Roger recognize?

A gift to charity from its 2020 income is deductible on an estate's Form 1041 if it is made by the end of the (2020, 2021) tax year.

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

Which of the following is a typical duty of an executor of an estate?

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. -The fiduciary in charge of a trust.

The Malik Estate operates a manufacturing business. Malik made no income distributions this year. It can claim the full deduction for the MACRS depreciation of the assets of the business.

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

A trust might be used when a married couple is divorcing.

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.

Consider the term fiduciary accounting income as it is used with respect to the Federal income taxation of trusts and estates. How is this amount computed? Where is it used in computing the parties' taxable incomes?

A Form 1041 must be filed by a trust that has $ or more gross income for the tax year.

Trusts can select any Federal income tax year-end.

For each of the following independent statements, choose the best answer. -The entity's management generally is directed by the controlling document as to the date of the entity's termination.

Which of the following statements, if any, relates to the tax treatment of both estates and trusts?

The Jiang Trust manages investment assets that were contributed by Kong several years ago. The trust distributed one-half of its DNI this year to Kong. Kong can retain all of the trust's tax-exempt interest income if:

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

Identify the parties that are present when an estate is created and their key duties. Then do the same for a trust.