Corporate Taxation
Exam Materials
Course Introduction
Corporate Taxation examines the federal income tax laws and principles governing corporations and their shareholders. The course covers topics such as the formation, operation, and liquidation of corporations; taxation of corporate earnings and distributions; and the implications of mergers, acquisitions, and reorganizations. Emphasis is placed on understanding the Internal Revenue Code provisions related to corporate entities, as well as tax planning strategies and compliance issues. Through analysis of cases, statutes, and practical problems, students gain a foundational understanding of how tax law shapes corporate behavior and influences broader business and financial decisions.
Recommended Textbook
South Western Federal Taxation 2013 Comprehensive Edition by William H. Hoffman
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Page 2
Chapter 1: An Introduction to Taxation and Understanding
the Federal Tax Law
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Sample Questions
Q1) Currently, the tax base for the Medicare component of the FICA is not limited to a dollar amount.
A)True
B)False
Answer: True
Q2) When a state decouples from a Federal tax provision, it means that this provision will not apply for state income tax purposes.
A)True
B)False
Answer: True
Q3) Which, if any, of the following transactions will decrease a taxing jurisdiction's ad valorem tax revenue imposed on real estate?
A)A tax holiday is granted to an out-of-state business that is searching for a new factory site.
B)An abandoned church is converted to a restaurant.
C)A public school is razed and turned into a city park.
D)A local university sells a dormitory for use as an apartment building.
E)None of the above.
Answer: A
Page 3
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Chapter 2: Working With the Tax Law
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Q1) Explain the tax appeals process from trial courts.
Answer: Appeals from a District Court or a Tax Court decision are to the U.S.Court of Appeals for the circuit in which the taxpayer resides.Appeals from the Court of Federal Claims go to the U.S.Court of Appeals for the Federal Circuit.Few Tax Court cases are appealed, and when appeals are made, most are filed by the taxpayer rather than the IRS.There is no appeal from the Small Cases Division.
Q2) The "respondent" refers to the party against whom a suit is brought.
A)True
B)False
Answer: True
Q3) Which statement is not true with respect to a Treasury Regulation?
A)Issued by the U.S.Congress.
B)Issued as Treasury Decision.
C)Designed to provide interpretation of the tax law.
D)Carries more legal force than a Revenue Ruling.
E)All of the above statements are true.
Answer: A
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Page 4
Chapter 3: Computing the Tax
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Q1) Howard, age 82, dies on January 2, 2012.On Howard's final income tax return, the full amount of the basic and additional standard deductions will be allowed even though Howard lived for only 2 days during the year.
A)True
B)False Answer: True
Q2) Lee, a citizen of Korea, is a resident of the U.S.Any rent income Lee receives from land he owns in Korea is not subject to the U.S.income tax.
A)True
B)False Answer: False
Q3) Deductions for AGI are often referred to as "above-the-line" or "page 1" deductions.Explain.
Answer: "Above the line" means before the bottom line of page 1 of Form 1040, which is AGI.These deductions appear on page 1 of Form 1040.
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Chapter 4: Gross Income: Concepts and Inclusions
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Sample Questions
Q1) Thelma and Mitch were divorced.The couple had a joint brokerage account that included stocks with a basis of $600,000 and a fair market value of $1,000,000.Under the terms of the divorce agreement, Mitch would receive the stocks and Mitch would pay Thelma $100,000 each year for 6 years, or until Thelma's death, whichever should occur first.Thelma and Mitch lived apart when the payments were made by Mitch.Mitch paid the $600,000 to Thelma over the six-year period.The divorce agreement did not contain the word "alimony." Then, Mitch sold the stocks for $1,300,000.Mitch's recognized gain from the sale is:
A)$0.
B)$1,000,000 ($1,300,000 - $300,000).
C)$700,000 ($1,300,000 - $600,000).
D)$300,000 ($1,300,000 - $1,000,000).
E)None of the above.
Q2) On January 1, 2012, Faye gave Todd, her son, a 36-month certificate of deposit she purchased December 31, 2010, for $8,638.Faye gave Todd 1,000 shares of ABC, Inc., on December 2, 2012.The certificate had a maturity value of $10,000 and the yield to maturity was 5%.On November 30, 2012, ABC, Inc., had declared a dividend of $1.00 payable to stockholders of record on December 5th.How much interest and dividends should Todd include in his gross income for 2012?
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Page 6
Chapter 5: Gross Income: Exclusions
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Q1) If a scholarship does not satisfy the requirements for a gift, the scholarship must be included in gross income.
A)True
B)False
Q2) On January 1, 2002, Cardinal Corporation issued 5% 25-year bonds at par and used the $12,000,000 proceeds to finance the construction of a new plant.On January 1, 2012, the company acquired the bonds on the open market for $11,500,000.Assuming that Cardinal Corporation is neither bankrupt nor insolvent, the acquisition and retirement of the bonds results in which of the following:
A)The company must recognize a $500,000 gain.
B)The company can make an election to recognize a $500,000 gain or reduce the company's basis in the plant by $500,000.
C)The company must recognize a $500,000 gain and increase the company's basis in the plant by $500,000.
D)The company can amortize the $500,000 gain, recognizing income over the remaining life of the bonds.
E)None of the above.
Q3) What Federal income tax benefits are provided for college students?
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Chapter 6: Deductions and Losses: in General
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Sample Questions
Q1) Vera is the CEO of Brunettes, a publicly held corporation.For the year, she receives a salary of $800,000, a bonus of $400,000, and contributions to her retirement plan of $45,000.The bonus was awarded at the December board meeting based on Vera's threat to accept a better paying job with a competitor.What amount may Brunettes deduct?
A)$842,000.
B)$1,045,000.
C)$1,200,000.
D)$1,245,000.
E)None of the above.
Q2) The cash method can be used even if inventory and cost of goods sold are an income producing factor in the business.
A)True
B)False
Q3) If a vacation home is a personal/rental residence, no maintenance and utility expenses can be claimed as a deduction.
A)True
B)False
Q4) What losses are deductible by an individual taxpayer?
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Chapter 7: Deductions and Losses: Certain Business
Expenses and Losses
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Q1) The amount of a farming loss cannot exceed the amount of the taxpayer's NOL for the taxable year.
A)True
B)False
Q2) A farming NOL may be carried back 2 years.
A)True
B)False
Q3) A bond held by an investor that is uncollectible will be treated as a worthless security and hence, produce a bad debt.
A)True
B)False
Q4) If an election is made to defer deduction of research expenditures, the amortization period is based on the expected life of the research project if less than 60 months.
A)True
B)False
Q5) Discuss the effect of alimony in computing a net operating loss.
Q6) A bona fide debt cannot arise on a loan between father and son.
A)True
B)False
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Chapter 8: Depreciation, Cost Recovery, Amortization, and Depletion
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Sample Questions
Q1) If a new car that is used predominantly in business is placed in service in 2012, the statutory dollar cost recovery limit under § 280F will depend on whether the taxpayer takes MACRS or straight-line depreciation.
A)True
B)False
Q2) Antiques may be eligible for cost recovery if they are used in a trade or business.
A)True
B)False
Q3) If 150% declining-balance is used, there is no straight-line switchover.
A)True
B)False
Q4) Taxpayers may elect to use the straight-line method under MACRS for personalty.
A)True
B)False
Q5) The cost of a covenant not to complete for 20 years incurred in connection with the acquisition of a business is amortized over 20 years.
A)True
B)False
10
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Chapter 9: Deductions: Employee and Self-Employed
Related Expenses
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Sample Questions
Q1) A taxpayer takes six clients to an NBA playoff game.If all of the tickets (list price of $120 each) are purchased on the Internet for $1,800 ($300 each), only $150 ($300 ´ 50% cutback adjustment) per ticket is deductible.
A)True
B)False
Q2) Corey performs services for Sophie. Which, if any, of the following factors indicate that Corey is an independent contractor, rather than an employee?
A)Cory sets the work schedule.
B)Sophie provides the tools used.
C)Corey files a Form 2106 with his Form 1040.
D)Corey is paid based on the time spent.
E)None of the above.
Q3) Myra's classification of those who work for her as independent contractors is being questioned by the IRS. It is the position of the IRS that these workers are really employees. What type of factors can Myra utilize to justify her classification?
Q4) For tax purposes, "travel" is a broader classification than "transportation."
A)True
B)False
Page 11
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Chapter 10: Deductions and Losses: Certain Itemized
Deductions
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Sample Questions
Q1) Taxes assessed for local benefits, such as a new sidewalk, are not deductible as real property taxes.
A)True
B)False
Q2) Linda borrowed $60,000 from her parents for a down payment on a condominium.She paid interest of $5,500 in 2010, $0 in 2011, and $9,000 in 2012.The IRS disallowed the deduction. Can you offer any explanation for the disallowance?
Q3) Matt, a calendar year taxpayer, pays $11,000 in medical expenses in 2012.He expects $5,000 of these expenses to be reimbursed by an insurance company in 2013.In determining his medical expense deduction for 2012, Matt must reduce his 2012 medical expenses by the amount of the reimbursement he expects in 2013.
A)True
B)False
Q4) Leona borrows $100,000 from First National Bank and uses the proceeds to purchase City of Houston bonds.The interest Leona pays on this loan is deductible as investment interest subject to the investment interest limits.
A)True
B)False
Page 12
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Chapter 11: Investor Losses
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Sample Questions
Q1) Sarah purchased for $100,000 a 10% interest in a business venture that is not subject to the passive activity rules.During the first year, her share of the entity's loss was $120,000.At the beginning of the second year, the entity obtained $800,000 of recourse financing.During the second year, Sarah withdrew cash of $20,000, and her share of the entity's loss was $25,000.Calculate the amount of loss that Sarah may claim in each of the two years and determine her at-risk amount at the end of each year.
Q2) Joe participates 95 hours in an activity, while an employee participates 5 hours.Joe has materially participated in the activity.
A)True
B)False
Q3) Describe the general rules that limit the deduction of investment interest expense.
Q4) Discuss the treatment given to suspended passive activity losses and credits. What happens to an activity's unused losses and credits when the activity is sold?
Q5) Describe the types of activities and taxpayers that are subject to the at-risk rules.
Q6) What special passive loss treatment is available to real estate activities?
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Page 13
Chapter 12: Tax Credits and Payments
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Q1) If the cost of a building constructed and placed into service by an eligible small business in the current year includes the cost of a wheelchair ramp, the cost of the ramp qualifies for the disabled access credit.
A)True
B)False
Q2) The education tax credits (i.e., the American Opportunity credit and the lifetime learning credit) are available to help defray the cost of higher education regardless of the income level of the taxpayer.
A)True
B)False
Q3) The incremental research activities credit is 20% of the qualified research expenses that exceed the base amount.
A)True
B)False
Q4) A taxpayer may qualify for the credit for child and dependent care expenses if the taxpayer's dependent is age 13 or less.
A)True
B)False
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Page 14
Chapter 13: Property Transactions: Determination of Gain or Loss,
Basis Considerations, and Nontaxable
Exchanges-Part 2
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Q1) Amy's manufacturing plant is destroyed by fire on the afternoon of October 25, 2012. The adjusted basis is $550,000. The insurance company offers a settlement of $520,000. After protracted negotiations, Amy receives $575,000 on June 20, 2013. Amy is a fiscal year taxpayer whose tax year ends on June 30th. What is the latest date that Amy can invest the proceeds in qualifying replacement property and elect to defer the gain under § 1033?
Q2) Lynn transfers her personal use automobile to her business (a sole proprietorship).The car's adjusted basis is $35,000 and the fair market value is $12,000.No cost recovery had been deducted by Lynn, since she held the car for personal use.Determine the adjusted basis of the car to Lynn's sole proprietorship including the basis for cost recovery.
Q3) Describe the relationship between the recovery of capital doctrine and the realized and recognized gain and loss concepts.
Q4) Discuss the treatment of realized gains from involuntary conversions.
Q5) For disallowed losses on related-party transactions, who has the right of offset?
Page 15
Q6) Under what circumstances may a partial § 121 exclusion be available even though the taxpayer has used the § 121 exclusion within the two-year period preceding the sale of the current residence?
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Page 16
Chapter 13: A: Property Transactions: Determination of Gain
or Loss, Basis Considerations, and Nontaxable Exchanges-Part 1
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Q1) To qualify as a like-kind exchange, real property must be exchanged either for other real property or for personal property with a statutory life of at least 39 years.
A)True
B)False
Q2) Gabe's office building (adjusted basis of $430,000; fair market value of $500,000) is destroyed by a hurricane.Due to a 20% co-insurance clause, Gabe receives insurance proceeds of only $400,000.If Gabe purchases an office building for $500,000 one month later, its adjusted basis is $530,000 ($500,000 cost + $30,000 postponed loss).
A)True
B)False
Q3) To qualify for the § 121 exclusion, the property must have been owned by the taxpayer for the 5 years preceding the date of sale and used by the taxpayer as the principal residence for the last 2 of those years.
A)True
B)False
Q4) The basis of property received by gift is always a carryover basis.
A)True B)False
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Chapter 14: Property Transactions: Capital Gains and Losses,
1231, Recapture Provisions
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Q1) A franchisor licenses its mode of business operation to a franchisee.
A)True
B)False
Q2) On January 18, 2011, Martha purchased 200 shares of Blue Corporation stock for $2,000.On November 11, 2012, she sold short 200 shares of Blue Corporation stock which she borrowed from her broker for $2,300.On February 10, 2013, Martha closed the short sale by delivering the 200 shares of Blue Corporation stock which she had acquired in 2011.On that date, Blue Corporation stock had a market price of $4 per share.What is Martha's recognized gain or loss and its character in 2012? In 2013?
Q3) Section 1231 property includes nonpersonal use property where casualty losses exceed casualty gains for the taxable year.
A)True
B)False
Q4) Depreciation recapture under § 1245 and § 1250 is reported on Form 4797.
A)True
B)False
Q5) If a capital asset is sold at a loss, the holding period is important.
A)True
B)False
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Chapter 15: Alternative Minimum Tax
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Q1) The recognized gain for regular income tax purposes and the recognized gain for AMT purposes on the sale of stock acquired under an incentive stock option (ISO) program are always the same because the adjusted basis is the same.
A)True
B)False
Q2) Since most tax preferences are merely timing differences, they eventually will reverse and net to zero.
A)True
B)False
Q3) If the AMT base is greater than $175,000, the AMT rate for an individual taxpayer is the same as the AMT rate for a C corporation.
A)True
B)False
Q4) Andrea, who is single, has a personal exemption deduction in calculating her 2012 taxable income.She has no dependency deductions.What is the amount of the AMT adjustment in calculating AMTI?
Q5) Discuss the tax year in which an AMT adjustment is first required for an ISO.
Q6) Why is there a need for a second tax system called the alternative minimum tax?
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Chapter 16: Accounting Periods and Methods
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Q1) Red Corporation and Green Corporation are equal partners in the R & G Partnership.Red Corporation's tax year ends September 30th, and Green Corporation is a calendar year taxpayer.R & G Partnership must use September 30th as its tax year, unless it has a business purpose for using a different tax year.
A)True
B)False
Q2) Alice, Inc., is an S corporation that has been in business for five years.Its annual gross receipts have never exceeded $1 million. The corporation operates a retail store and also owns rental property.The sales from the retail store and the rental income may be reported by the cash method, unless Alice previously elected the accrual method.
A)True
B)False
Q3) For purposes of determining the partnership's tax year, there may be more than one principal partner.
A)True
B)False
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Chapter 17: Corporations: Introduction and Operating Rules
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Q1) Azul Corporation, a calendar year C corporation, received a dividend of $50,000 from Naranja Corporation. Azul owns 10% of the Naranja Corporation stock. Assuming it is not subject to the taxable income limitation, Azul's dividends received deduction is $35,000.
A)True
B)False
Q2) Donald owns a 60% interest in a partnership that earned $230,000 in the current year. He also owns 60% of the stock in a C corporation that earned $230,000 during the year. Donald received $50,000 in distributions from each of the two entities during the year. With respect to this information, Donald must report $188,000 of income on his individual income tax return for the year.
A)True
B)False
Q3) A corporation with $5 million or more in assets must file Schedule M-3 (instead of Schedule M-1).
A)True
B)False
Q4) Explain the rules regarding the accounting periods available to corporate taxpayers.
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Chapter 18: Corporations: Organization and Capital Structure
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Q1) When Pheasant Corporation was formed under § 351, Kristen transferred property (basis of $26,000 and fair market value of $22,500) for § 1244 stock. Kristen's basis in the Pheasant stock is $26,000. Three years later, Pheasant Corporation goes bankrupt and its stock becomes worthless. Kristen, who is single, owned the stock as an investment. Kristen's loss is:
A)$26,000 capital.
B)$22,500 ordinary and $3,500 capital.
C)$3,500 ordinary and $22,500 capital.
D)$26,000 ordinary.
E)None of the above.
Q2) Three individuals form Skylark Corporation with the following contributions: Cliff, cash of $50,000 for 50 shares; Brad, land worth $20,000 (basis of $11,000) for 20 shares; and Ron, cattle worth $9,000 (basis of $6,000) for 9 shares and services worth $21,000 for 21 shares.
A)These transfers are fully taxable and not subject to § 351.
B)Ron's basis in his stock is $27,000.
C)Ron's basis in his stock is $6,000.
D)Brad's basis in his stock is $20,000.
E)None of the above.
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Chapter 19: Corporations: Distributions Not in Complete
Liquidation
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Q1) During the current year, Goose Corporation sold equipment for $500,000 (adjusted basis of $260,000).The equipment was purchased a few years ago for $560,000 and $300,000 in MACRS deductions have been claimed.ADS depreciation would have been $200,000.As a result of the sale, the adjustment to taxable income needed to determine current E & P is:
A)No adjustment is required.
B)Subtract $100,000.
C)Add $100,000.
D)Add $80,000.
E)None of the above.
Q2) Ten years ago, Carrie purchased 2,000 shares in Osprey Corporation for $20,000.In the current year, Carrie receives a nontaxable stock dividend of 20 shares of Osprey preferred.Values at the time of the dividend are: $8,000 for the preferred stock and $72,000 for the common.Based on this information, Carrie's basis in the stock is:
A)$20,000 in the common and $8,000 in the preferred.
B)$2,000 in the common and $18,000 in the preferred.
C)$18,000 in the common and $2,000 in the preferred.
D)$19,802 in the common and $198 in the preferred.
E)None of the above.
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Chapter 20: Corporations: Distributions in Complete
Liquidation and an Overview of Reorganizations
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Q1) Legal dissolution under state law is required for a liquidation to be complete for tax purposes.
A)True
B)False
Q2) The stock of Penguin Corporation is held as follows: 85% by Duck Corporation and 15% by Gerald, an individual. Penguin Corporation is liquidated in December of the current year, pursuant to a plan adopted earlier in the year. Penguin Corporation distributes land with a basis of $350,000 and fair market value of $390,000 to Gerald in liquidation of his stock interest. Gerald had a basis of $200,000 in his Penguin stock. How much gain will Penguin Corporation recognize in this liquidating distribution?
A)$0.
B)$40,000.
C)$190,000.
D)$390,000.
E)None of the above.
Q3) The text discusses four different limitations on loss recognition by liquidating corporations. Provide a brief description of each of these loss limitations.
Q4) Discuss the role of letter rulings in corporate reorganizations.
Page 24
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Chapter 21: Partnerships
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Q1) The "outside basis" is defined as a partner's basis in the partnership interest.
A)True
B)False
Q2) Fern, Inc., Ivy Inc., and Jason formed a general partnership.Fern owns a 50% interest and Ivy and Jason each own 25% interests.Fern, Inc.files its tax return on a July 1 - June 30 fiscal year; Ivy Inc.files on a September 1 - August 31 fiscal year; and Jason is a calendar year taxpayer.Which of the following statements is true regarding the taxable year the partnership can choose?
A)The partnership must choose the calendar year because it has no principal partners.
B)The partnership must choose a June 30 year-end because Fern, Inc.is a majority partner.
C)The partnership can request permission from the IRS to use a January 31 fiscal year if it can establish that is a natural business year.
D)The partnership cannot use the "least aggregate deferral" method to determine its taxable year.
E)None of the above.
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Chapter 22: S: Corporations
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Q1) The § 1202 exclusion of _________________ on the disposition of small business stock (is/is not) _________________ available for S stock.
Q2) What method is used to allocate S corporation income or losses (unless an election to the contrary is made)?
A)Any method agreed to by all of the shareholders.
B)Per-day allocation.
C)FIFO method.
D)LIFO method.
Q3) A per-day, per-share allocation of flow-through S corporation items must be used, unless the shareholder disposes of the entire interest in the entity.
A)True
B)False
Q4) Which statement is incorrect with respect to filing an S election?
A)Form 2553 must be filed.
B)All shareholders must consent.
C)The election may be filed in the previous year.
D)An extension of time is available for filing Form 2553.
E)None of the above statements is incorrect.
Q5) An S corporation may not have a ____________________ alien shareholder.
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Chapter 23: Exempt Entities
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Q1) Which of the following statements regarding exempt organization filing requirements is incorrect?
A)Churches are required to file Form 990 (Return of Organization Exempt from Income Tax) only if its annual gross receipts exceed $50,000.
B)The due date for Form 990 (Return of Organization Exempt from Income Tax) is the fifteenth day of the fifth month after the end of the taxable year, whereas for private foundations the due date for Form 990-PF (Return of Private Foundation) is the fifteenth day of the fourth month after the end of the tax year.
C)Exempt organizations whose annual gross receipts do not exceed $50,000 can file an e-Postcard.
D)Only a.and b.are incorrect.
E)a., b., and c.are incorrect.
Q2) Wett, Inc., a § 501(c)(3) exempt organization, acquired all the stock of a for-profit corporation for $150,000.Wett is a private foundation.The acquired corporation was not a related business.Calculate the tax on excess business holdings.Assume that corrective action is taken so that the additional tax does not apply.
Q3) What is the purpose of the unrelated business income tax?
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Page 27
Chapter 24: Multistate Corporate Taxation
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Q1) In most states, medical services are exempt from the sales/use tax base.
A)True
B)False
Q2) State Q has adopted sales-factor-only apportionment for its corporate income tax. As a result, a ____________________ (larger/smaller) percentage of an out-of-state corporation's income is assigned to tax in the state.
Q3) A use tax applies when a State A resident purchases:
A)A new automobile from a State A dealership.
B)A used automobile from the web site of a State A dealership.
C)A new automobile from a State B dealership, then using the car back at home.
D)Hardware from sears.com rather than at the Best Buy store at the local mall.
Q4) Typically exempt from the sales/use tax base is the purchase of clothing from a neighbor's "garage sale."
A)True
B)False
Q5) An ad valorem property tax is based on the asset's current
Q6) A number of court cases in the last several decades have involved the application of a state's nexus rules concerning a business taxpayer. What is the significance of the term nexus when discussing state income taxation?
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Chapter 25: Taxation of International Transactions
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Q1) Which of the following statements regarding the U.S.taxation of foreign persons is true?
A)A foreign person's effectively connected income is subject to U.S.income taxation.
B)A foreign person's effectively connected income is tax free unless it is portfolio income.
C)A foreign person may earn income from U.S.real property without incurring any U.S.income tax.
D)A foreign person must spend at least 183 days in the United States before any effectively connected income is subject to U.S.taxation.
Q2) USCo, a domestic corporation, receives $700,000 of foreign-source passive income on which foreign taxes of $70,000 are withheld.Its worldwide taxable income is $1,500,000 and its U.S.tax liability before the foreign tax credit is $525,000.What is USCo's allowed foreign tax credit?
A)$70,000.
B)$175,000.
C)$245,000.
D)$770,000.
Q3) Discuss the primary purposes of income tax treaties.
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Chapter 26: Tax Practice and Ethics
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Q1) The tax professional can do more than just tax compliance work. He or she can work with the client in consultation over the strategy and tactics of dealing with a Federal tax audit.
A)True
B)False
Q2) To file for a tax refund, an individual generally uses Form
Q3) Freddie has been assessed a preparer penalty for willful and reckless conduct.When he completed Peggy's Federal income tax return (who is in the 35% tax bracket), Freddie purposely omitted $100,000 of cash receipts that should have been reported as gross income.Freddie charged Peggy $4,000 to prepare the return.What is Freddie's preparer penalty?
A)$0, because Peggy incurred her own understatement penalty for the return.
B)$2,000.
C)$4,000.
D)$5,000.
Q4) Circular 230 requires that the tax practitioner use the "best practices" of the tax profession in carrying out a tax engagement. Specify what some of these best practices entail.
Q5) The IRS is a subsidiary agency of the Department of the ____________________.
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Chapter 28: Income Taxation of Trusts and Estates
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Q1) 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
Q2) Generally, capital gains are allocated to fiduciary income, because they arise from current-year transactions as directed by the trustee.
A)True
B)False
Q3) A fiduciary's distribution deduction shifts the tax burden for current-year income from the entity to the beneficiary.
A)True
B)False
Q4) The Moot Trust distributes an asset to its income beneficiary that shows a realized gain. What are the Federal income tax consequences of the distribution? What if the asset shows a realized loss?
Q5) Every ____________________ trust is allowed a $300 personal exemption.
Q6) The IRS encourages ____________________ filing for Forms 1041.
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