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Question;2564. CHAPTER;20?INCOME TAXATION OF TRUSTS AND ESTATES Question PR #6;The LMN Trust is a simple trust that correctly uses the calendar year for tax;purposes. Its income beneficiaries (Kathie, Lynn, Mark, and Norelle) are;entitled to the trust?s annual accounting income in shares of one-fourth each.;For the current calendar year, the trust has ordinary business income of;$30,000, a long-term capital gain of $20,000 (allocable to income), and a;trustee commission expense of $4,000 (allocable to corpus). Use the format of;Figure 20.3 in the text to address the following items.;a.;How much;income is each beneficiary entitled to receive?;b.;What is the;trust?s DNI?;c.;What is the;trust?s taxable income?;d.;How much is;taxed to each of the beneficiaries?;2565. CHAPTER;20?INCOME TAXATION OF TRUSTS AND ESTATES Question PR #7;The Cooper Trust is required to distribute $80,000 annually, split equally;between its two income beneficiaries, Amber and Byron. If trust income is not;sufficient to pay these amounts, the trustee can invade corpus to the extent;necessary. During the current year, the trust has DNI of $50,000. Byron;receives an additional $20,000 discretionary corpus distribution.;a.;How much of;the $40,000 distributed to Amber is included in her gross income?;b.;How much of;the $60,000 distributed to Byron is included in his gross income?;c.;How much of;these distributions are first-tier or second-tier?;2566. CHAPTER;20?INCOME TAXATION OF TRUSTS AND ESTATES Question PR #8;An estate has $100,000 DNI, composed of $50,000 dividends, $20,000 taxable;interest, $10,000 passive income, and $20,000 tax-exempt interest. The trust?s;two noncharitable income beneficiaries, Shanna and Tom, receive distributions;of $75,000 each. How much of each class of income is deemed to have been;distributed to Shanna? To Tom? Use the following template to structure your;answer.;Beneficiary;Amount;Received;DNI, Income Type;Corpus;Non-taxable;Dividends;Taxable;Interest;Passive;Exempt;Interest;Shanna;Tom;Totals in;DNI;2567. CHAPTER;20?INCOME TAXATION OF TRUSTS AND ESTATES Question PR #9;The trustee of the Miguel Trust can distribute any amount of accounting income;and corpus to the trust?s income beneficiaries, Paula and George. This year;the trust incurred the following.;Taxable;interest income;$40,000;Tax-exempt;interest income;20,000;Long-term;capital gains?allocable to corpus;10,000;Fiduciary?s fees?allocable;to corpus;6,000;The trustee distributed $40,000 to Paula and $40,000 to George.;a.;What is;Miguel?s trust accounting income?;b.;What is;Miguel?s DNI?;c.;What is;Miguel?s taxable income?;d.;How much;gross income is recognized by each of the beneficiaries?;2568. CHAPTER;20?INCOME TAXATION OF TRUSTS AND ESTATES Question PR #10;The Yan Estate is your client, as are many of the decedent?s family members.;Determine the tax effects of the indicated losses for the Yan Estate for both;tax years. The estate holds a variety of investment assets, which it received;from the decedent, Mrs. Yan. The estate?s sole income and remainder beneficiary;is Yan, Jr.;Tax Year;Loss Generated;2011 (first;tax year);Taxable;income ($300);Capital loss;($20,000);2012 (final;tax year);Taxable;income ($40,000);2569. CHAPTER;20?INCOME TAXATION OF TRUSTS AND ESTATES Question ES #1;Explain how the Federal income tax law applies to a fiduciary entity like a;trust. Is the tax structure similar to that of an individual? A partnership?;2570. CHAPTER;20?INCOME TAXATION OF TRUSTS AND ESTATES Question ES #2;List some of the most commonly encountered motivations for creating fiduciary;entities.;2571. CHAPTER;20?INCOME TAXATION OF TRUSTS AND ESTATES Question ES #3;Identify the parties that are present when an estate is created, and their key;duties. Then do the same for a trust.;2572. CHAPTER;20?INCOME TAXATION OF TRUSTS AND ESTATES Question ES #4;Tax professionals use the terms simple;trust and complex trust when;dealing with fiduciary arrangements. How does one know whether a trust is;?simple? or ?complex?? When is this determination made?;2573. CHAPTER;20?INCOME TAXATION OF TRUSTS AND ESTATES Question ES #5;Is a trust subject to the alternative minimum tax? Or does the trust ?pass;through? AMT items to its grantor and beneficiaries?.;2574. CHAPTER;20?INCOME TAXATION OF TRUSTS AND ESTATES Question ES #6;How is entity accounting income computed? What role does it play in Subchapter;J?;2575. CHAPTER;20?INCOME TAXATION OF TRUSTS AND ESTATES Question ES #7;When a fiduciary distributes to a beneficiary a non-cash asset, how is the;realized gain or loss treated?;2576. CHAPTER;20?INCOME TAXATION OF TRUSTS AND ESTATES Question ES #8;The Gibson Estate is responsible for the income;in respect of a decedent (IRD) of Juanita Gibson, the deceased. Define the;term IRD and describe its treatment for Federal tax purposes;2577. CHAPTER;20?INCOME TAXATION OF TRUSTS AND ESTATES Question ES #9;The Circle Trust has some exempt interest income for the year. How does this;investment income affect Circle?s deduction of its fiduciary fees? Charitable;contributions?;2578. CHAPTER;20?INCOME TAXATION OF TRUSTS AND ESTATES Question ES #10;The Leonardo Estate operates a business and generates cost recovery deductions.;Which taxpayer(s), if any, can deduct these items, e.g., the deceased, the;estate, the income or remainder beneficiaries?;2579. CHAPTER;20?INCOME TAXATION OF TRUSTS AND ESTATES Question ES #11;What is meant by the term ?distributable net income?? What is its significance;in connection with the income taxation of estates, trusts and their;beneficiaries?;2580. CHAPTER;20?INCOME TAXATION OF TRUSTS AND ESTATES Question ES #12;In computing Federal taxable income, can the trust or estate use its;distributable net income (DNI) as its deduction for distributions to beneficiaries?;Explain.;2581. CHAPTER;20?INCOME TAXATION OF TRUSTS AND ESTATES Question ES #13;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.;2582. CHAPTER;20?INCOME TAXATION OF TRUSTS AND ESTATES Question ES #14;List the three major functions of distributable net income (DNI) as that amount;is used under Federal income tax law.;2583. CHAPTER;20?INCOME TAXATION OF TRUSTS AND ESTATES Question ES #15;Your client Pryce is one of the income beneficiaries of the Santiago Trust.;Pryce says to you, ?I want all of the exempt interest income from Santiago to;be allocated to me, as I am the income beneficiary who is subject to the;highest marginal Federal income tax rate.? How do you respond to Pryce?s;request?;2584. CHAPTER;20?INCOME TAXATION OF TRUSTS AND ESTATES Question ES #16;When the Holloway Trust terminated this year, it held a $1 million NOL;carryforward. How is the loss carryforward treated? Does it expire with the;trust or can another taxpayer use it? Be specific.;2585. CHAPTER;20?INCOME TAXATION OF TRUSTS AND ESTATES Question ES #17;Peggy, a trustee, has learned that the Olsen Trust has been characterized as a;?grantor trust.? What are the tax consequences of this status?;2586. CHAPTER;20?INCOME TAXATION OF TRUSTS AND ESTATES Question ES #18;A grantor trust results when the donor of the entity?s corpus retains ?too;much? control over the trust income and assets. Name at least three powers that;can trigger grantor trust status.;2587. CHAPTER;20?INCOME TAXATION OF TRUSTS AND ESTATES Question ES #19;You are responsible for the Federal income tax filings of the Tyrone Trust.;Summarize the relevant due dates and filing requirements for Tyrone..;2588. CHAPTER;20?INCOME TAXATION OF TRUSTS AND ESTATES Question ES #20;Your client Ming is a complex trust that operates exclusively in the U.S. Make;a list of five or more tax planning opportunities that you might suggest to;Ming.

 

Paper#59270 | Written in 18-Jul-2015

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