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Exam 28: Income Taxation of Trusts and Estates

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Question 41

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

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.DNI determines the maximum amount that ...

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Question 42

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The Yan Estate is your client,as are many of the decedent's family members.Determine the tax effects of the indicated losses for the Yan Estate for both tax years.The estate holds a variety of investment assets,which it received from the decedent,Mrs.Yan.The estate's sole income and remainder beneficiary is Yan,Jr. Tax Year Loss Generated 2015 (first tax year) Taxable income ($300) Capital loss ($20,000) 2016 (final tax year) Taxable income ($40,000)

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2015
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No flow-through of either th...

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Question 43

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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.

The rental income of a trust usually is allocable to ____________________ (income,remainder) beneficiaries.

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

This year,the Nano Trust reported $50,000 entity accounting income and $40,000 distributable net income (DNI) .Nano distributed $30,000 cash to Horatio,its sole income beneficiary.Nano is a complex trust.Nano's distribution deduction is:

A fiduciary's cost recovery deductions are assigned corresponding to the disposition of entity ____________________ income for the year.

The Whitmer Trust operates a manufacturing business and distributes the profits to its income beneficiaries.Whitmer also passes through to the income beneficiaries the data needed to compute their domestic production activities deduction.

For each of the following independent statements, choose the best answer. a.Tax attribute of complex trusts only b.Tax attribute of estates only c.Tax attribute of estates and complex trusts d.Tax attribute of neither estates nor complex trusts -The entity's AMT preferences and adjustments pass through to the income beneficiaries.

Under the Federal income tax rules for trusts and estates,a(n) ____________________ generally must use a calendar tax year,but a(n) ____________________ can select any tax year-end.

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

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

The Yeoman Trust has generated several Federal income tax credits for this tax year.Which taxpayer(s),if any,can use these credits in computing a Federal income tax liability,e.g. ,the grantor,the trust,its income beneficiaries,its remainder beneficiaries? Answer for estates,simple trusts,and complex trusts.

A decedent's income in respect of a decedent is subject to the Federal income tax,but it is excluded from the estate tax.

Which of the following taxpayers use a Schedule K and K-1 to pass through income,loss,and credit amounts to the owners or beneficiaries?

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

The interest income of a trust usually is allocable to ____________________ (income,remainder) beneficiaries.

The Suarez Trust generated distributable net income (DNI) this year of $150,000,two-thirds of which was portfolio income,and the balance of which was exempt interest.Under the terms of the trust,Clara Suarez is to receive an annual income distribution of $30,000.At the discretion of the trustee,additional distributions can be made to Clara or to Clark Suarez III.This year,the trustee's distributions to Clara totaled $60,000.Clark received $90,000.How much of the trust's DNI is assigned to Clara?

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 includes $10,000 for the interest income.

For each of the following independent statements, choose the best answer. a.Tax attribute of complex trusts only b.Tax attribute of estates only c.Tax attribute of estates and complex trusts d.Tax attribute of neither estates nor complex trusts -The entity is entitled to a personal exemption of $600.