Question2527. CHAPTER 20—INCOME TAXATION OF TRUSTS AND ESTATES Question CO #2

01 May Question2527. CHAPTER 20—INCOME TAXATION OF TRUSTS AND ESTATES Question CO #2

Question
2527. CHAPTER 20—INCOME TAXATION OF TRUSTS AND ESTATES Question CO #2
The grantor of a trust generally designates both ____________________ and ____________________ beneficiaries under the controlling agreement.

2528. CHAPTER 20—INCOME TAXATION OF TRUSTS AND ESTATES Question CO #3
Under the general rules of Subchapter J, whoever receives the ____________________ income of a trust or estate is the one who pays tax on it.

2529. CHAPTER 20—INCOME TAXATION OF TRUSTS AND ESTATES Question CO #4
A fiduciary arrangement creates a separate tax and legal entity, but Subchapter J applies a modified ____________________ principle in deriving the Federal income tax liability for estates, trusts, and their beneficiaries.

2530. CHAPTER 20—INCOME TAXATION OF TRUSTS AND ESTATES Question CO #5
Under the Federal income tax rules for fiduciary entities, a(n) ____________________ generally must use a calendar tax year, but a(n) ____________________can select any tax year-end.

2531. CHAPTER 20—INCOME TAXATION OF TRUSTS AND ESTATES Question CO #6
Every ____________________ trust is allowed a $300 personal exemption.

2532. CHAPTER 20—INCOME TAXATION OF TRUSTS AND ESTATES Question CO #7
It is ____________________ (rare, common, impossible) for a trust or estate to incur a liability for the alternative minimum tax.

2533. CHAPTER 20—INCOME TAXATION OF TRUSTS AND ESTATES Question CO #8
A fiduciary entity computes its alternative minimum tax in a manner similar to that used for a(n) ____________________.

2534. CHAPTER 20—INCOME TAXATION OF TRUSTS AND ESTATES Question CO #9
The first step in deriving the taxable income of a trust or estate is to determine its ____________________ income.

2535. CHAPTER 20—INCOME TAXATION OF TRUSTS AND ESTATES Question CO #10
Generally, an estate’s taxable income is computed in a manner similar to that used for a(n) ____________________.

2536. CHAPTER 20—INCOME TAXATION OF TRUSTS AND ESTATES Question CO #11
Entity accounting income is controlled by the terms of the ____________________ for an estate or the ____________________ for a trust.

2537. CHAPTER 20—INCOME TAXATION OF TRUSTS AND ESTATES Question CO #12
By____________________ various items to entity accounting income, the will or trust determines the size of the distribution to the income beneficiaries.

2538. CHAPTER 20—INCOME TAXATION OF TRUSTS AND ESTATES Question CO #13
The exempt interest income of a trust usually is allocable to ____________________ beneficiaries.

2539. CHAPTER 20—INCOME TAXATION OF TRUSTS AND ESTATES Question CO #14
The depreciation deductions of a trust usually are allocable to ____________________ beneficiaries.

2540. CHAPTER 20—INCOME TAXATION OF TRUSTS AND ESTATES Question CO #15
When a beneficiary receives a distribution from a trust of an asset other than cash, generally a(n) ____________________ basis is assigned to the asset.

2541. CHAPTER 20—INCOME TAXATION OF TRUSTS AND ESTATES Question CO #16
When a beneficiary receives a distribution from a trust of an asset other than cash, the realized loss could be disallowed under the ____________________ rule.

2542. CHAPTER 20—INCOME TAXATION OF TRUSTS AND ESTATES Question CO #17
A fiduciary’s ____________________ deductions are assigned corresponding to the disposition of entity accounting income for the year.

2543. CHAPTER 20—INCOME TAXATION OF TRUSTS AND ESTATES Question CO #18
A gift to charity from its 2011 income is deductible on an estate’s Form 1041 if it is made by the end of the ____________________ tax year.

2544. CHAPTER 20—INCOME TAXATION OF TRUSTS AND ESTATES Question CO #19
The deduction for the Goodman Trust’s $100,000 gift to charity is ____________________ when one-fourth of Goodman’s accounting income for the tax year is exempt interest income.

2545. CHAPTER 20—INCOME TAXATION OF TRUSTS AND ESTATES Question CO #20
____________________ is the maximum amount that can be included in the beneficiaries’ gross incomes from the fiduciary for the year.

2546. CHAPTER 20—INCOME TAXATION OF TRUSTS AND ESTATES Question CO #21
A fiduciary assigns its tax credits to beneficiaries corresponding to the disposition of its ____________________ for the year.

2547. CHAPTER 20—INCOME TAXATION OF TRUSTS AND ESTATES Question CO #22
A ____________________ tier distribution is one that the trust agreement requires to be made by the trustee to the income beneficiary.

2548. CHAPTER 20—INCOME TAXATION OF TRUSTS AND ESTATES Question CO #23
One trust that is operated independently for each of its three beneficiaries might be taxed using the ____________________ rule.

2549. CHAPTER 20—INCOME TAXATION OF TRUSTS AND ESTATES Question CO #24
Income beneficiary Molly wants to receive all of the municipal bond interest income of the Brenner Trust. A ____________________ of this sort must be supported by a non-tax economic effect.

2550. CHAPTER 20—INCOME TAXATION OF TRUSTS AND ESTATES Question CO #25
Remainder beneficiary Shelley receives a $50,000 net operating loss carryover when the Malone Trust terminates. Shelley deducts this amount ____________________ (for/from) AGI on her Form 1040.

2551. CHAPTER 20—INCOME TAXATION OF TRUSTS AND ESTATES Question CO #26
Income is taxed to the creator of a(n) ____________________ trust, instead of to the entity.

2552. CHAPTER 20—INCOME TAXATION OF TRUSTS AND ESTATES Question CO #27
The entity is a ___________________ trust if the grantor retains the power to revoke the trust.

2553. CHAPTER 20—INCOME TAXATION OF TRUSTS AND ESTATES Question CO #28
If the grantor of a trust retains the right to receive borrowed funds from the trust at a zero interest rate, the entity ____________________ (is, is not) treated as a grantor trust.

2554. CHAPTER 20—INCOME TAXATION OF TRUSTS AND ESTATES Question CO #29
The accounting income of a trust is distributed to the grantor’s ex-spouse, in satisfaction of the year’s alimony obligation. The ____________________ is taxed on the amount of the distribution.

2555. CHAPTER 20—INCOME TAXATION OF TRUSTS AND ESTATES Question CO #30
A Form 1041 must be filed by an estate that recognizes $____________________ or more gross income for the tax year.

2556. CHAPTER 20—INCOME TAXATION OF TRUSTS AND ESTATES Question CO #31
The Form 1041 of a calendar-year trust is due on ____________________ 15.

2557. CHAPTER 20—INCOME TAXATION OF TRUSTS AND ESTATES Question CO #32
The IRS encourages ____________________ filing for Forms 1041.

2558. CHAPTER 20—INCOME TAXATION OF TRUSTS AND ESTATES Question CO #33
Beneficiary information concerning a trust’s income and distributions are conveyed on Schedule ____________________ of the Form 1041.

2559. CHAPTER 20—INCOME TAXATION OF TRUSTS AND ESTATES Question PR #1
The Purple Trust incurred the following items this year.

Taxable interest income

$50,000

Tax-exempt interest income, not on private activity bonds

20,000

Tax-exempt interest income, on private activity bonds

10,000

Compute Purple’s tentative minimum tax for the year. Purple does not have any credits available to reduce the AMT liability.

2560. CHAPTER 20—INCOME TAXATION OF TRUSTS AND ESTATES Question PR #2
The Booker Trust is your client. Complete the chart below, indicating Booker’s trust accounting income for each of the alternatives.

Interest income, taxable

$60,000

Interest income, tax-exempt

30,000

Interest income, tax-exempt but AMT preference

10,000

Long-term capital gain

15,000

Trustee fee

3,000

Trust agreement provisions

Trust accounting income

Fees and capital gains allocable to corpus

______________________

Capital gains allocable to corpus, one-half of fees allocable to income

______________________

Capital gains allocable to income, silent concerning allocation of fees

______________________

Fees and exempt income allocable to corpus, silent concerning allocation of capital gain/loss

______________________

2561. CHAPTER 20—INCOME TAXATION OF TRUSTS AND ESTATES Question PR #3
Bob is one of the income beneficiaries of the LaQuanda 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 Lulu LaQuanda (cash basis) at her death. Compute Bob’s § 691(c) deduction for the current year, given the following data.

Sales commissions receivable

$50,000

Deferred gain on installment sale, three payments to be received after this year

10,000