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Question;2431. Question;TF #1;Tax planning motivations usually are secondary to other objectives in deciding;whether to create a trust.;a.;True;b. False;2432. Question;TF #2;A trust might be used by the parties to an impending divorce.;a.;True;b. False;2433. Question;TF #3;Like a limited liability company, the fiduciary is a tax-reporting, but not a;separate tax-paying entity.;a.;True;b. False;2434. Question;TF #4;An estate?s income beneficiary generally must wait until the entity is;terminated by the executor to receive any distribution of income.;a.;True;b. False;2435. Question;TF #5;With respect to a trust, the terms creator;donor, and grantor are synonyms.;a.;True;b. False;2436. Question;TF #6 Corpus, principal, and assets of the trust are synonyms.;a.;True;b. False;2437. Question;TF #7;If provided for in the controlling agreement, a trust might terminate when the;income beneficiary graduates with a law degree.;a.;True;b. False;2438. Question;TF #8;The decedent?s estate must terminate within four years of the date of death.;a.;True;b. False;2439. Question;TF #9;Trusts usually are required to use a calendar tax year;a.;True;b. False;2440. Question;TF #10;A complex trust pays tax on the income that it retains and adds to corpus.;a.;True;b. False;2441. Question;TF #11;A complex trust may incur a liability for the AMT.;a.;True;b. False;2442. Question;TF #12;The first step in computing an estate?s taxable income is the determination of;its gross income for the year.;a.;True;b. False;2443. Question;TF #13;Generally, capital gains are allocated to fiduciary income, because they relate;to investment assets.;a.;True;b. False;2444. Question;TF #14;Gain or loss is recognized by a trust when it distributes a non-cash asset.;a.;True;b. False;2445. Question;TF #15;Income in respect of a decedent can be subject to both income and estate tax at;the Federal level.;a.;True;b. False;2446. Question;TF #16;An example of income in respect of a decedent is the taxpayer?s last paycheck;uncollected at death.;a.;True;b. False;2447. Question;TF #17;When a trust operates a trade or business, it can claim a deduction for wages;paid to employees.;a.;True;b. False;2448. Question;TF #18;Estates and trusts can claim Federal income tax deductions for costs incurred;in maintaining investments in U.S. state and local bonds.;a.;True;b. False;2449. Question;TF #19;The Bard Estate incurs a $25,000 fee in disposing of the real property of the;decedent. The deduction is claimed against the Federal estate tax, unless by;election it is claimed on the estate?s income tax return.;a.;True;b. False;2450. Question;TF #20;The Bard Estate incurs a $25,000 fee in disposing of the real property of the;decedent. The deduction can be claimed $10,000 against the Federal estate tax;and $15,000 on the estate?s income tax return.;a.;True;b. False;2451. Question;TF #21;Cost recovery deductions are assigned pro rata to the recipients of an estate?s;distributable net income (DNI).;a.;True;b. False;2452. Question;TF #22;An estate operates a manufacturing business. It can claim a domestic production;activities deduction (DPAD).;a.;True;b. False;2453. Question;TF #23;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.;a.;True;b. False;2454. Question;TF #24;The Whitmer Trust operates a manufacturing business. When Whitmer incurs a net;operating loss, the current-year deduction passes through to the income;beneficiaries.;a.;True;b. False;2455. Question;TF #25;The Griffin Trust makes a gift to a qualifying charity. Griffin?s entity-level;deduction is allowed only to the extent of 50% of distributable net income.;a.;True;b. False;2456. Question;TF #26;A complex trust can claim a Year 1 deduction for a gift to charity, where the;contribution was made on October 20 of Year 2 out of gross income recognized in;Year 1.;a.;True;b. False;2457. Question;TF #27;Sixty percent of the income received by the Atom Trust this year constituted;municipal bond interest. Atom?s trustee also made a $100,000 gift to the United;Fund, a qualifying charity. The charitable deduction associated with this gift;is limited to $60,000.;a.;True;b. False;2458. Question;TF #28;A fiduciary?s distribution deduction shifts the tax burden for current-year;income from the entity to the beneficiary.;a.;True;b. False;2459. Question;TF #29;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 $30,000.;Harry?s AGI can increase by as much as $40,000.;a.;True;b. False;2460. Question;TF #30;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 $40,000.;a.;True;b. False;2461. Question;TF #31;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.;a.;True;b. False;2462. Question;TF #32;One-third of the Hermann Estate?s distributable net income consists of;qualifying dividends. Thus, when income beneficiary Susie receives a $30,000;income distribution from the estate, $10,000 of it qualifies for the 15% tax;rate.;a.;True;b. False;2463. Question;TF #33;In computing distributable net income (DNI) for a trust, one removes any corpus;net capital gain or loss.;a.;True;b. False;2464. Question;TF #34;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.;a.;True;b. False;2465. Question;TF #35;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.;a.;True;b. False;2466. Question;TF #36;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.;a.;True;b. False;2467. Question;TF #37;The Crown Trust distributed one-half of its accounting income to Lee this year.;Lee also is allocated one-half of Crown?s credit for building low-income housing.;a.;True;b. False;2468. Question;TF #38;?First-tier distributions? allowed by the will or trust document are made at;the discretion of the executor or trustee.;a.;True;b. False;2469. Question;TF #39;When DNI includes exempt interest income, the beneficiary includes less than;the full amount of DNI in current-year gross income.;a.;True;b. False;2470. Question;TF #40;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.;a.;True;b. False;2471. Question;TF #41;The Winston Trust is classified as a grantor trust, because the donor can;revoke the trust. Consequently, Winston need not file an annual Form 1041, and;he reports the trust items on his own Form 1040.;a.;True;b. False;2472. Question;TF #42;The grantor set up a trust, income to a daughter, remainder to a grandson. To;the extent that trust income is used to pay a life insurance premium on the;grantor?s spouse, Subchapter J rules are ignored, and the income is taxed to;the grantor.;a.;True;b. False;2473. Question;TF #43;The grantor set up a trust, income to a daughter, remainder to a grandson. To;the extent that trust income is used to satisfy the grantor?s legal obligation;to pay for his daughter?s high school education, Subchapter J rules are;ignored, and the income is taxed to the grantor.;a.;True;b. False;2474. Question;TF #44;The grantor set up a trust, income to a daughter, remainder to a grandson. To;the extent that trust income is accumulated for a later distribution to the;grandson, Subchapter J rules are ignored, and the income is taxed to the grantor.;a.;True;b. False;2475. Question;TF #45;The unextended due date for a calendar-year trust to file its Form 1041 is;March 15.;a.;True;b. False;2476. Question;TF #46;Tax planning usually dictates that high-income and -wealth individuals be;specified as first-tier beneficiaries of a trust arrangement.;a.;True;b. False;2477. Question;TF #47;When a trust distributes an in-kind asset with a realized loss, most likely;this loss should be allocated to and immediately deducted by the first-tier;beneficiaries.;a.;True;b. False;2478. Question;TF #48;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.;a.;True;b. False;2479. Question;TF #49;Generally, an administrative expense attributable to municipal bond interest;should be claimed on the estate?s Form 706.;a.;True;b. False

 

Paper#59267 | Written in 18-Jul-2015

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