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Exam 28: Income Taxation of Trusts and Estates

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Question 51

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A single trust that is operated independently for each of its three beneficiaries might be taxed using the ____________________ rule.

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Question 52

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List at least three non-tax reasons that you might suggest to your client Connie that she should consider shifting some income and assets to a trust.

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Trusts often are used to shift managemen...

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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?

A fiduciary's distribution deduction shifts the tax burden for current-year income from the entity to the beneficiary.

Beginning with its ____________________ tax year, an estate must remit quarterly Federal estimated income tax payments. or

Beneficiary information concerning a trust's income and distributions are conveyed on Schedule ____________________ of the Form 1041.

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

A trust might be used by one running for a political office.

In computing the Federal taxable income of a trust, the first step is to determine its ____________________ income.

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

There are several business tax credits that the Yeoman Trust has generated for this tax year. Which taxpayer(s), if any, can use these credits in computing a Federal income tax liability? Explain.

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

In the year in which an estate terminates, its beneficiaries receive and can use as their own any unexpired NOL carryforwards proportionately to the corpus assets that they received.

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

Generally, an administrative expense should be claimed on the decedent's estate tax return, because it is subject to a higher marginal tax bracket than is the estate's taxable income.

The trust instrument indicates whether cost recovery is ____________________ to fiduciary accounting income, thereby reducing the amount of the distribution to the income beneficiary.

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?

The Doyle Trust reports distributable net income for the year of $100,000 and no income from tax-exempt sources.Under the terms of the trust instrument, the trustee must distribute $30,000 to Roger and $30,000 to Sally.After payment of these amounts, the trustee is empowered to make additional distributions at its discretion.Exercising this authority, the trustee distributes an additional $25,000 to Roger and $25,000 to Sally.How much income from the trust must Sally recognize?

Which of the following taxpayers can be subject to an entity-level Federal income tax?