25 May Question 1. ThePrasad Trustincurred thefollowing itemsfor 2014.
Question
1. ThePrasad Trustincurred thefollowing itemsfor 2014.
| Taxable interestincome | $50,000 |
| Tax-exemptinterest income,notonprivateactivitybonds | 25,000 |
| Tax-exemptinterest income,onprivateactivitybonds | 5,000 |
Compute Prasad’stentativeminimum taxfor theyear. Prasaddoesnot holdanycredits availabletoreduce the AMTliability.
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2. TheKapoor Trustis yourclient. Completethe chartbelow,indicating Kapoor’strust accountingincome foreach of thealternatives.
| Interest income,taxable | $60,000 |
| Interestincome, tax-exempt | 30,000 |
| Interestincome, tax-exemptbut AMTpreference | 10,000 |
| Long-termcapital gain | 40,000 |
| Trusteefee | 5,000 |
Trustagreementprovisions Trustaccountingincome
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 ______________________
3. Reggieisoneof theincome beneficiariesofthe LaQuandaEstate,which issubjectto a35%marginalFederalestatetaxrate,a35%marginalFederalincometaxrate,anda10%marginal stateincometaxrate.Thisyear,ReggiereceivedallofthesalescommissionsthatwereearnedandpayabletoLuluLaQuanda(cashbasis)atherdeath.Compute Reggie’s§691(c)deduction forthecurrentyear,giventhefollowingdata.
Sales commissionsreceivable $50,000
Deferredgainoninstallmentsale,threepaymentstobereceived,startingnextyear 20,000
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