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Exam 28: Income Taxation of Trusts and Estates

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Question 51

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The Taft Estate was established when Winnie Taft died on March 1, 2012. It selects a fiscal Federal income tax year that ends on October 31. For which tax year ending October 31 must Taft begin to make quarterly estimated Federal income tax payments?

A) 2012.
B) 2013.
C) 2014.
D) Fiduciary entities are not required to make quarterly estimated tax payments.

E) A) and C)
F) B) and C)

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Question 52

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Tax professionals use the terms simple trust and complex trust when dealing with fiduciary arrangements. How does one know whether a trust is "simple" or "complex?" When is this determination made?

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Under the rules of Subchapter J, a simpl...

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Question 53

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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?

Income beneficiary Molly wants to receive all of the municipal bond interest income of the Brenner Trust. A special allocation of this sort must be supported by a non-tax ____________________.

The depreciation deductions of a trust usually are allocable to ____________________ beneficiaries. or

Entity accounting income is controlled by the terms of the ____________________ for an estate or the ____________________ for a trust.

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

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

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

This year, the Huang Trust distributed all of its accounting income and $1,000 from corpus.Huang's taxable income for the year is:

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 (DNI) includes $9,000 for the interest income.

An estate ____________________ (can/cannot) be liable for a Federal alternative minimum tax.

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

The Prakash Estate is required to pay its entire annual accounting income to beneficiaries Sam and Janet.The estate's personal exemption is:

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

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

Your client Pryce is one of the income beneficiaries of the Santiago Trust. Pryce says to you, "I want all of the exempt interest income from Santiago to be allocated to me, as I am the income beneficiary who is subject to the highest marginal Federal income tax rate." How do you respond to Pryce's request?

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 Form 1041 of a calendar-year trust is due on ____________________ 15.

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