Question 1

A trust reports the following results:
  All of the items are allocated to income except the capital gains.Calculate the maximum amount of trustee fees that are deductible.

Accepted Answer

The answer of A trust reports the following results:
 ...

Question 2

Describe the tier system for trust beneficiaries.

Accepted Answer

The answer of Describe the tier system for trust beneficiaries....

Question 3

Melody Trust has $60,000 of DNI for the current year, $20,000 of rental income and $40,000 of corporate bond interest.The trust instrument requires the trustee to distribute 30% of the trust income to Lee and 70% to Sarah, annually.The trust instrument does not require an allocation of the different types of income to the two beneficiaries.What is the amount and composition of the income reported by Lee and Sarah, respectively?

Accepted Answer

The answer of Melody Trust has $60,000 of DNI for...

Question 4

Explain how to determine the deductible portion of trustee's fees.

Accepted Answer

The answer of Explain how to determine the deductible portion...

Question 5

A trust reports the following results:
  All of the items above are allocated to income.Calculate the maximum amount of trustee fees that are deductible.

Accepted Answer

The answer of A trust reports the following results:
 ...

Question 6

A trust reports the following results:
  The trust must distribute all of its income annually.Calculate taxable income after the distribution deduction.

Accepted Answer

The answer of A trust reports the following results:
 ...

Question 7

Explain to a client the significance of the income and principal categorization scheme used for fiduciary accounting purposes.

Accepted Answer

The answer of Explain to a client the significance of...

Question 8

A trust must distribute all of its income annually.Capital gains are allocated to principal.The trust has dividend income of $12,000, capital gains of $6,000, and no expenses.Calculate the trust's taxable income.

Accepted Answer

The answer of A trust must distribute all of its...

Question 9

A trust has distributable net income (DNI)of $50,000, including $30,000 tax-exempt interest income and $20,000 taxable interest income.The trust instrument requires that all income be distributed at least annually, 30% to Jane and 70% to Joe.What is the amount and character of the income that Jane receives?

Accepted Answer

The answer of A trust has distributable net income (DNI)of...

Question 10

Explain the three functions of distributable net income (DNI).

Accepted Answer

The answer of Explain the three functions of distributable net...

Question 11

The Williams Trust was established six years ago.The trust document allows the trustee to distribute income in its discretion to beneficiaries Carol and Karen for the next 15 years.The trust will then be terminated and the trust assets will be divided equally between Carol and Karen.Capital gains are part of principal.
The current year income and expenses of the trust are reported below.
  Distribution of net accounting income to:
  Compute (a)distributable net income (DNI), (b)distribution deduction, (c)trust taxable income, and (d)Carol's and Karen's reportable income and its classification.Charge all of the deductible expenses against the rental income.

Accepted Answer

The answer of The Williams Trust was established six years...

Question 12

The Tucker Trust was established six years ago.The trust is required to distribute all of the trust income at least annually to Betty for life.Capital gains are credited to principal.The current year results of the trust are as follows:
  Payment of estimated taxes
Compute (a)distributable net income (DNI), (b)the distribution deduction, (c)trust taxable income, and (d)Betty's reportable income and its classification.Charge all of the deductible expenses against rent income.

Accepted Answer

The answer of The Tucker Trust was established six years...

Question 13

Ebony Trust was established two years ago with Brent as the beneficiary.The trust instrument instructed the trustee last year to make discretionary distributions of income to Brent.Beginning in two years, the trustee is instructed to pay all of the trust income earned that year to Brent.What was the trust's personal exemption last year? What will the personal exemption be in two years?

Accepted Answer

The answer of Ebony Trust was established two years ago...

Question 14

What is the basis of inherited IRD items to the beneficiary?

Accepted Answer

The answer of What is the basis of inherited IRD...

Question 15

Outline the classification of principal and income under the Revised Uniform Principal and Income Act.

Accepted Answer

The answer of Outline the classification of principal and income...

Question 16

A client asks about the relevance of state law in classifying items as principal or income.Explain the relevance.

Accepted Answer

The answer of A client asks about the relevance of...

Question 17

List some common examples of principal and income items.

Accepted Answer

The answer of List some common examples of principal and...

Question 18

A simple trust has the following results:
  Calculate the distribution deduction.

Accepted Answer

The answer of A simple trust has the following results:
...

Question 19

In the year of termination, a trust incurs a $20,000 NOL.In addition, it has a $30,000 NOL carryover from the two preceding tax years.The trust distributes 40% of its assets to Sam, 30% of its assets to Alex, and 30% of its assets to Catherine.How much of the NOL can Sam (who has $150,000 of gross income)deduct on his return in the year that the trust terminates?

Accepted Answer

The answer of In the year of termination, a trust...

Question 20

A trust document does not mention the treatment for depreciation.The state has adopted the Uniform Act.The trust document states that depreciation is a charge against corpus.The trust results are the following:
  Calculate net accounting income.

Accepted Answer

The answer of A trust document does not mention the...

Quiz 14: Income Taxation of Trusts and Estates

A trust reports the following results: All of the items are allocated to income except the capital gains.Calculate the maximum amount of trustee fees that are deductible.

Describe the tier system for trust beneficiaries.

Explain how to determine the deductible portion of trustee's fees.

A trust reports the following results: All of the items above are allocated to income.Calculate the maximum amount of trustee fees that are deductible.

A trust reports the following results: The trust must distribute all of its income annually.Calculate taxable income after the distribution deduction.

Explain to a client the significance of the income and principal categorization scheme used for fiduciary accounting purposes.

A trust must distribute all of its income annually.Capital gains are allocated to principal.The trust has dividend income of $12,000, capital gains of $6,000, and no expenses.Calculate the trust's taxable income.

Explain the three functions of distributable net income (DNI).

What is the basis of inherited IRD items to the beneficiary?

Outline the classification of principal and income under the Revised Uniform Principal and Income Act.

A client asks about the relevance of state law in classifying items as principal or income.Explain the relevance.

List some common examples of principal and income items.

A simple trust has the following results: Calculate the distribution deduction.

A trust document does not mention the treatment for depreciation.The state has adopted the Uniform Act.The trust document states that depreciation is a charge against corpus.The trust results are the following: Calculate net accounting income.