FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 28: Income Taxation of Trusts and Estates

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 41

Essay

Review LaterAdd Note

Review Later

Identify the parties that are present when an estate is created,and their key duties.A trust.

Correct Answer

verified

An estate of a decedent is created eithe...

View Answer

Show Answer

Question 42

Multiple Choice

Review LaterAdd Note

Review Later

The trustee of the Epsilon Trust distributed an asset to Telly,a qualifying income beneficiary.The asset's basis to the trust was $10,000,and its fair market value on the distribution date was $25,000.Which of the following statements is true?

A) Assuming that the trustee made an election under § 643(e) ,the trust is allowed a $10,000 distribution deduction for this transaction.
B) Assuming that the trustee made an election under § 643(e) ,Telly recognizes $10,000 gross income on the distribution.
C) Lacking any election by the trustee,the trust recognizes $15,000 gross income on the distribution.
D) Lacking any election by the trustee,Telly's basis in the asset is $10,000.
E) Lacking any election by the trustee,Telly's basis in the asset is stepped up to $25,000.

F) C) and D)
G) A) and B)

Correct Answer

verified

Show Answer

Question 43

True/False

Review LaterAdd Note

A trust might be used by a newly elected politician.

The Crown Trust distributed one-half of its accounting income to Lee this year.Lee also is allocated one-half of Crown's credit for building low-income housing.

An estate's beneficiary generally must wait until the entity is terminated by the executor to receive any distribution of income.

Which of the following restrictions applies concerning distributions to trust beneficiaries?

When a trust incurs a net operating loss,the current-year deduction passes through to the income beneficiaries.

A fiduciary assigns its tax credits to beneficiaries corresponding to the disposition of its ____________________ for the year.

Generally,an estate's taxable income is computed in a manner similar to that used for a(n)____________________.

A gift to charity is deductible on an estate's Form 1041 if it is made within ____________________ of the end of the tax year.

When a trust makes a gift to a qualifying charity,the entity-level deduction is allowed only to the extent of 10% of distributable net income.

Can a trust or estate claim a deduction for cost recovery? Explain.

List some of the most commonly encountered motivations for creating fiduciary entities.

Complete the chart below,indicating trust accounting income for each of the alternatives.For this purpose,use the following information.

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

A fiduciary's distribution deduction assures that current-year income is taxed only once.

Bob is one of the income beneficiaries of the LeMans Estate,which is subject to a 45% marginal Federal estate tax rate,a 35% marginal Federal income tax rate,and a 5% marginal state income tax rate.This year,Bob received all of the sales commissions that were earned and payable to Violet LeMans (cash basis)at her death.Compute Bob's § 691(c)deduction for the current year,given the following data.

Distribution of an appreciated asset triggers immediate gain recognition to the trust.

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

List the three major functions of distributable net income (DNI)in determining how the beneficiaries of a trust or estate account for their distributions received for the tax year.