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Exam 19: Income Taxation of Trusts and Estates

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Question 51

Multiple Choice

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

A) $600.
B) $300.
C) $100.
D) $0.

E) All of the above
F) None of the above

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Question 52

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With respect to a trust,the terms creator,donor,and grantor are synonyms.

A) True
B) False

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Question 53

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Distribution of an appreciated asset triggers immediate gain recognition to the trust.

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 taxpayers can be subject to an entity-level Federal income tax?

A trust might be used to carry out a corporate liquidation.

Harry,the sole income beneficiary,received a $40,000 distribution from the Lucy Trust,in a year when the trust's distributable net income was $50,000.Harry's AGI can increase by as much as $50,000.

The entity is entitled to a personal exemption of $300.

This year,the Nano Trust reported $50,000 entity accounting income and $40,000 distributable net income (DNI) . Nano distributed $60,000 cash to Horatio,its sole income beneficiary. Nano is a simple trust. Nano's distribution deduction is:

The Roz Trust has distributable net income (DNI) for the year of $100,000 and no income from tax-exempt sources.Under the terms of the trust instrument,the trustee must distribute $80,000 to Roger and $80,000 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 $40,000 to Roger and $20,000 to Sally.How much gross income from the trust must Roger recognize?

The Form 1041 of a calendar-year trust is due on ____________________ 15.

For each of the following independent statements, choose the best answer. a.Tax attribute of estates only b.Tax attribute of complex trust only c.Tax attribute of estates and complex trusts d.Tax attribute of neither estates nor complex trusts -The entity's deduction for charitable contributions relates to the taxable income items it earns.

Under the general rules of Subchapter J,whoever receives the ____________________ income of a trust or estate is the one who pays tax on it.

The entity must file an income tax return if its gross income for the year is $600 or more.

Distributions to beneficiaries are accounted for with a two-tier system.

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

Essentially,any tax year can be chosen.

The Rodriguez Trust generated $35,000 in alternative minimum taxable income (AMTI) this year.The trust is subject to a marginal rate of:

Every ____________________ trust is allowed a $____________________ personal exemption.

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 is computed net of the full $3,000 deduction for the fees.