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Exam 20: Income Taxation of Trusts and Estates

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Question 51

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How does the alternative minimum tax affect fiduciary entities?

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An estate or trust is subject to the alt...

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Question 52

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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.

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Net IRD = Income receivable (IRD)$80,000...

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Question 53

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Summarize the Federal income tax filing requirements that apply to an estate or trust.

The trust instrument provides that Tamara,the sole income beneficiary,is to receive $30,000 annually.If trust accounting income is not sufficient to pay this amount,the trustee is empowered to invade corpus to the extent necessary.During the current year,the trust has distributable net income (DNI) of $100,000,including $20,000 of tax-exempt interest.In accordance with the trust instrument,$30,000 is paid to Tamara.How much income is taxable to Tamara for the current year?

A complex trust can claim a Year 1 deduction for a gift to charity,where the contribution was made in October of Year 2 out of gross income recognized in Year 1.

Which of the following is the annual maximum amount to be included as gross income by all of the income beneficiaries of the trust or estate?

To reduce trustee commissions,the Emily Trust is operated as though it were two trusts (i.e. ,with 70-year-old Grandma and 7-year old Skippy each holding equal shares) .This year the trust generated distributable net income (DNI) of $80,000.The trustee distributed $90,000 to Grandma this year: $40,000 as her one-half share of the entity's income,and $50,000 as a distribution of principal.How much of the year's distributable net income is assigned to Grandma?

List several key planning ideas with respect to the income taxation of a complex trust and its beneficiaries.

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

The Williamson Estate generated distributable net income (DNI) this year of $120,000,one-third of which was tax-exempt interest,and the balance of which was long-term capital gain.Muffy Williamson,the sole income beneficiary of the estate,received a distribution of the entire $150,000 accounting income of the entity.How is this distribution accounted for by Muffy?

The Roz Trust has 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 paying these amounts,the trustee is empowered to make additional distributions at its discretion.Exercising this authority,the trustee distributes an additional $10,000 to Roger and $30,000 to Sally.How much gross income from the trust must Roger recognize?

The Jain Estate is required to pay its entire annual accounting income to Sam and Janet.The estate's personal exemption is:

How is entity accounting income computed? What role does it play in Subchapter J?

Jose is subject to the top marginal Federal income tax rates.Carlita is considering establishing a trust in which Jose would be an income beneficiary.Considering only income tax consequences,Jose should be designated as:

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.

With respect to a selling expense incurred by an estate in disposing of the decedent's property,a deduction can be claimed on the Form 706 only if the executor waives the corresponding deduction in computing the estate's Federal income tax.

Three months after Emma died,her executor received the final $10,000 installment of Emma's Super Lottery winnings from the state.Which of the following statements is true?

A complex trust may incur a liability for the AMT.

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

Which of the following is a typical duty of an executor?