Estate and Gift Taxation
Textbook Exam Questions
Course Introduction
Estate and Gift Taxation provides a comprehensive overview of the federal laws and regulations governing the taxation of wealth transfers, both during life and at death. The course explores the fundamental principles of estate and gift tax, including the determination of gross estate, allowable deductions, exclusions, tax computation, and compliance requirements. Students examine key concepts such as lifetime gifts, testamentary transfers, powers of appointment, marital and charitable deductions, valuation of property, and the role of trusts in estate planning. Through analysis of statutes, regulations, and case law, the course prepares students to identify tax issues, apply planning strategies, and navigate complex reporting obligations relevant to individuals, families, and fiduciaries involved in wealth transfer and succession planning.
Recommended Textbook
South Western Federal Taxation 2011 Comprehensive 34th 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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Q1) Sales made by mail order are exempt from the application of a general sales (or use)tax.
A)True
B)False
Answer: False
Q2) A major advantage of a flat tax type of income tax is its simplicity.
A)True
B)False Answer: True
Q3) A use tax is imposed by:
A)The Federal government and all states.
B)The Federal government and a majority of the states.
C)Most of the states and not the Federal government.
D)All states and not the Federal government.
E)None of the above.
Answer: C
Q4) The Federal estate and gift taxes are examples of progressive taxes.
A)True
B)False Answer: True
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Chapter 2: Working With the Tax Law
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Q1) Subchapter K refers to the "Partners and Partnerships" section of the Code.
A)True
B)False Answer: True
Q2) Temporary Regulations have the same authoritative value as Finalized Regulations.
A)True
B)False Answer: True
Q3) Regulations are issued by the Treasury Department.
A)True
B)False Answer: True
Q4) Interpretive Regulations have the force and effect of law.
A)True
B)False Answer: False
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Page 4
Chapter 3: Computing the Tax
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Questions
Q1) In meeting the criteria of a qualifying child for dependency exemption purposes,when if ever,might the child's income become relevant?
Answer: The amount of income earned by the qualifying child normally is of no consequence.If,however,such income is used to make the child self-supporting,then he or she can no longer be a qualifying child.Such child also would not be a qualifying relative due to the gross income and support tests.
Q2) Surviving spouse filing status begins in the year in which the deceased spouse died. A)True
B)False
Answer: False
Q3) Buddy and Hazel are ages 72 and 71 and file a joint return.If they have itemized deductions of $13,500 for 2010,they should not claim the standard deduction. A)True
B)False
Answer: False
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Chapter 4: Gross Income: Concepts and Inclusions
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Q1) Ted and Alice were in the process of negotiating a divorce agreement.They own bonds with a basis of $800,000 and a fair market value of $800,000.They also own common stock with a basis of $500,000 and a fair market value of $800,000.Alice is trying to decide whether to bargain to receive the bonds or the stock.Whichever of the assets she receives,she will sell it to start a new business and to purchase a house.She knows that Ted would prefer to receive the bonds,but she is not sure why.
a.Why do you suppose that Ted prefers to receive the bonds?
b.If Ted is bargaining to receive the bonds,what additional consideration should Alice receive?
Q2) Under the original issue discount (OID)rules as applied to a three-year certificate of deposit:
A)All of the income must be recognized in the year of purchase.
B)The OID will not be included in gross income until the end of the third year.
C)The interest income for the first year will be greater than the interest income for the second year.
D)The original issue discount must be amortized using the effective interest method.
E)None of the above is correct.
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Chapter 5: Gross Income: Exclusions
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Q1) In 2010,Bob's unincorporated business has a net loss of $12,000.Bob has investment income of $15,000.Itemized deductions and personal exemptions total $13,000.Thus,on his 2010 tax return,his taxable income was a negative $10,000.In 2010,Bob discovered that an employee has stolen $14,000 (pocketing the proceeds from unrecorded sales)from the business.This $14,000 theft loss is included in calculating the net loss of Bob's business of $12,000.In 2011,Bob recovers the $14,000 from the former employee.How can the tax benefit rule assist Bob in 2011?
Q2) A U.S.citizen who works in France from February 1,2010 until January 31,2011 is eligible for the foreign earned income exclusion in 2010 and 2011.
A)True
B)False
Q3) Melody works for a company with only 22 employees.Her employer contributed $2,000 to her health savings account (HSA),and the account earned $100 in interest during the year.Melody withdrew only $1,200 to pay medical expenses during the year.Melody is not required to recognize any gross income from the HSA for the year.
A)True
B)False
Q4) What Federal income tax benefits are provided for college students?
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Page 7
Chapter 6: Deductions and Losses: in General
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Q1) Briefly explain why interest on money borrowed to buy tax-exempt municipal bonds is disallowed as a deduction.
Q2) Landscaping expenditures on new rental property are deductible in the year they are paid or incurred.
A)True
B)False
Q3) What losses are deductible by an individual taxpayer?
Q4) Rob,a shareholder-employee of Falcon,Inc. ,receives a $300,000 salary.The IRS classifies $100,000 of this amount as unreasonable compensation.The effect of this reclassification is to decrease Rob's gross income by $100,000 and increase Falcon's gross income by $100,000.
A)True
B)False
Q5) Which of the following is a deduction from AGI (itemized deduction)?
A)Contribution to a traditional IRA.
B)Roof repairs to a rental home.
C)Safe deposit box rental fee in which stock certificates are stored.
D)Alimony payment.
E)None of the above.
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Chapter 7: Deductions and Losses: Certain Business
Expenses and Losses
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Q1) A theft or other casualty of personal use property can create an NOL for an individual.
A)True
B)False
Q2) Last year,Sarah (who files as single)had silverware worth $10,000 (basis $6,000)stolen from her home.Sarah's insurance company told her that her policy did not cover the theft.Sarah's other itemized deductions last year were $10,000.She had AGI of $30,000 last year.In August of the current year,Sarah's insurance company decided that Sarah's policy did cover the theft of the silverware and they paid Sarah $5,000.Determine the tax treatment of the $5,000 received by Sarah during the current year.
A)None of the $5,000 should be included in gross income.
B)$2,900 should be included in gross income.
C)$5,000 should be included in gross income.
D)Last year's return should be amended to include the $5,000.
E)None of the above.
Q3) A farming NOL may be carried back 5 years.
A)True
B)False
Q4) Why was the domestic production activities deduction (DPAD)enacted by Congress?
Page 9
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Chapter 8: Depreciation,cost Recovery,amortization,and Depletion
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Q1) On March 1,2010,Lana leases and places in service a passenger automobile.The lease will run for five years and the payments are $900 per month.During 2010,she uses her car 20% for business and 80% for personal activities.Assuming the dollar amount from the IRS table is $233,determine Lana's deduction for the lease payments.
A)$0.
B)$1,800.
C)$2,000.
D)$2,330.
E)None of the above.
Q2) Norm purchases a new sports utility vehicle (SUV)on October 12,2010,for $50,000.The SUV has a gross vehicle weight of 6,200 lbs.It is used 100% of the time for business and it is the only business asset acquired by Norm during 2010.Compute the maximum deduction with respect to the SUV for 2010.If Congress reenacts additional first-year depreciation for 2010,Norm elects not to take additional first-year depreciation.
Q3) ADS 150% declining-balance depreciation is used to compute earnings and profits.
A)True
B)False
Q4) Discuss the reason for the inclusion amount with respect to leased automobiles.
Page 10
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Chapter 9: Deductions: Employee and
Self-Employed-Related Expenses
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Q1) By itself,credit card receipts will constitute adequate substantiation for travel expenses.
A)True
B)False
Q2) A common law employee who chooses the standard deduction will be unable to claim any unreimbursed work-related expenses as a deduction.
A)True
B)False
Q3) Amy lives and works in St.Louis.In the morning she flies to Boston,has a three-hour business meeting,and returns to St.Louis that evening.For tax purposes,Amy was not away from home.
A)True
B)False
Q4) For self-employed taxpayers,travel expenses are not subject to the 2%-of-AGI floor. A)True
B)False
Q5) How are combined business/pleasure trips treated for travel within the United States as opposed to foreign travel?
11
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Chapter 10: Deductions and Losses: Certain Itemized Deductions
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Q1) In Shelby County,the real property tax year is the calendar year.The real property tax becomes a personal liability of the owner of real property on January 1 in the current real property tax year,2010.The tax is payable on June 1,2010.On April 30,2010,Julio sells his house to Anita for $230,000.On June 1,2010,Anita pays the entire real estate tax of $7,300 for the year ending December 31,2010.How much of the property taxes may Julio deduct?
A)$0.
B)$2,380.
C)$2,400.
D)$4,920
E)None of the above.
Q2) Martha drove 200 miles to volunteer in a project sponsored by a qualified charitable organization.In addition,she spent $150 for meals while away from home.She may take a charitable contribution deduction of $178 [$150 + (200 miles * $0.14)].
A)True
B)False
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Chapter 11: Investor Losses
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Q1) During the year,Bear Company incurs a $25,000 loss on a passive activity,has active income of $17,000,and portfolio income of $12,000.If Bear is a personal service corporation,it may deduct all of the $25,000 passive loss.
A)True
B)False
Q2) In 2010,Emily invests $100,000 in a limited partnership that is not a passive activity.During 2010,her share of the partnership loss is $70,000.In 2011,her share of the partnership loss is $50,000.How much can Emily deduct in 2010 and 2011?
Q3) Jack owns a 10% interest in a partnership (not real estate)in which his at-risk amount is $42,000 at the beginning of the year.During the year,the partnership borrows $80,000 on a nonrecourse note and incurs a loss of $60,000 from operations.Jack's at-risk amount at the end of the year is $44,000.
A)True
B)False
Q4) Faye dies owning an interest in a passive activity property (adjusted basis of $150,000,suspended losses of $52,000,and a fair market value of $180,000).What,if any,can be deducted on her final income tax return?
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Chapter 12: Tax Credits and Payments
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Q1) Which of the following correctly reflects current rules regarding estimated tax payments for individuals?
A)Employees are not subject to the estimated tax payment provisions.
B)Any penalty imposed for underpayment is deductible for income tax purposes.
C)Married taxpayers may not make joint estimated tax payments unless they file a joint income tax return.
D)No quarterly payments are required if the taxpayer's estimated tax is under $1,000.
E)None of the above.
Q2) Unused foreign tax credits can be carried back one year and forward fifteen years.
A)True
B)False
Q3) Qualifying tuition expenses paid from the proceeds of a tax-exempt scholarship do not give rise to an education tax credit.
A)True
B)False
Q4) Describe the withholding requirements applicable to employers.
Q5) Discuss the treatment of unused general business credits.
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Chapter 13: Part 1--Property Transactions: Determination of
Gain or Loss,basis Considerations,and Nontaxable Exchanges
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Q1) Gains and losses on nontaxable exchanges are deferred because the tax law recognizes that nontaxable exchanges result in a change in the form but not the substance of the taxpayer's relative economic position.
A)True
B)False
Q2) Rita owns a horse farm with 450 acres of land (adjusted basis of $900,000).Twenty-five acres of the land are condemned by the state for $250,000 in order to build a highway.Since the fair market value of Rita's farm is significantly decreased by the proximity to the future highway,the state awards Rita $225,000 in severance damages.Rita does not use the $225,000 to restore the usefulness of the farm and all of the $475,000 proceeds are invested in the stock market.What is her recognized gain or loss associated with the receipt of the severance damages?
A)$0.
B)$225,000.
C)$250,000.
D)$475,000.
E)None of the above.
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Chapter 13: Part 2--Property Transactions: Determination of
Gain or Loss,basis Considerations,and Nontaxable Exchanges
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Q1) On January 5,2010,Bill sells his principal residence with an adjusted basis of $185,000 for $500,000.He has owned and occupied the residence for 18 years.He pays $30,000 in commissions and $1,200 in legal fees in connection with the sale.One month before the sale,Bill painted the house at a cost of $4,000 and repaired various items at a cost of $2,500.On October 15,2010,Bill purchases a new home for $400,000.On November 15,2011,he pays $25,000 for completion of a new room on the house,and on January 14,2012,he pays $15,000 for the construction of a pool.What is the Bill's recognized gain on the sale of his old principal residence and what is the basis for the new residence?
Q2) Explain how the sale of investment property at a loss to a brother is treated differently from a sale to a nephew.
Q3) What is the easiest way for a taxpayer who is going to sell property that has declined in value to avoid the § 267 loss disallowance provision?
Q4) Discuss the effect of a liability assumption on the seller's amount realized and the buyer's adjusted basis.
Q5) Discuss the treatment of realized gains from involuntary conversions.
Page 16
Q6) Define qualified small business stock under § 1045.
Q7) What is the general formula for calculating the adjusted basis of property?
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Page 17
Chapter 14: Property Transactions: Capital Gains and Losses,1231,and
Recapure Provisions
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Q1) Short-term capital losses are netted against long-term capital gains and long-term capital losses are netted against short-term capital gains.
A)True
B)False
Q2) For § 1245 recapture to apply,accelerated depreciation must have been taken on the property.
A)True
B)False
Q3) In 2010 Angela,a single taxpayer with no dependents,disposed of for $44,000 a business building which cost $100,000.$60,000 of depreciation had been taken on the building.Angela has a short-term capital loss of $3,000 this year.She has taxable income (not related to property transactions)of $125,000.She has no § 1231 lookback loss.What is the amount and nature of the gain or loss,what is Angela's taxable income,and what is her tax on the taxable income?
Q4) The Code contains two major depreciation recapture provisions-§§ 1245 and 1250.
A)True
B)False
Q5) What characteristics must the seller of a patent have in order to be classified as a holder?
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Chapter 15: Alternative Minimum Tax
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Q1) If a gambling loss itemized deduction is permitted for regular income tax purposes,the amount of the gambling loss itemized deduction for AMT purposes is the same.
A)True
B)False
Q2) If the tentative AMT is less than the regular income tax,the AMT will be zero.
A)True
B)False
Q3) When qualified residence interest exceeds qualified housing interest,the positive adjustment required in calculating AMT is a timing adjustment.That is,in the future,there will be an offsetting negative adjustment.Comment on the validity of this statement.
Q4) Interest income on private activity bonds issued before 2009,reduced by expenses incurred in carrying the bonds,is a tax preference item that is included in computing AMTI.
A)True B)False
Q5) For the ACE adjustment,discuss the relationship between ACE and unadjusted AMTI.
Q6) What is the relationship between the regular income tax liability and the tentative AMT?
Page 19
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Chapter 16: Accounting Periods and Methods
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Q1) The installment method applies to which of the following sales with payments being made in the year following the year of sale?
A)An automobile dealer's sale of an SUV.
B)A cash basis individual's sale of General Electric common stock.
C)A manufacturer's sale of fully-depreciated equipment.
D)All of the above.
E)None of the above.
Q2) For purposes of determining the partnership's tax year,there may be more than one principal partner.
A)True
B)False
Q3) In the case of a sale reported under the installment method,no gain is reported until the seller has recovered the entire cost of the property sold.
A)True
B)False
Q4) An S corporation's tax year,generally,is determined by the tax year of its principal shareholders.
A)True
B)False
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Chapter 17: Corporations: Introduction and Operating Rules
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Q1) Macayo,Inc. ,received $800,000 life insurance proceeds on the death of its president.The $800,000 will be a subtraction item on Macayo's Schedule M-1.
A)True
B)False
Q2) For a corporation in 2010,the domestic production activities deduction is equal to 9% of the lower of (1)qualified production activities income or (2)taxable income.However,the deduction cannot exceed 50% of the W-2 wages related to qualified production activities income.
A)True
B)False
Q3) Schedule M-1 is used to reconcile unappropriated retained earnings at the beginning of the year with unappropriated retained earnings at the end of the year.
A)True
B)False
Q4) The corporate marginal tax rates range from 10% to 39%,while the individual marginal tax rates range from 15% to 35%.
A)True
B)False
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Page 21
Chapter 18: Corporations: Organization and Capital Structure
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Q1) Trudy forms Oak Corporation by transferring land with a basis of $150,000 (fair market value of $800,000),subject to a mortgage of $450,000.Two weeks prior to incorporating Oak,Trudy borrows $10,000 for personal purposes and gives the lender a second mortgage on the land.Oak Corporation issues stock worth $340,000 to Trudy and assumes the two mortgages on the land.What are the tax consequences to Trudy and to Oak Corporation?
Q2) Erica transfers land worth $500,000,basis of $100,000,to a newly formed corporation,Robin Corporation,for all of Robin's stock,worth $300,000,and a 10-year note.The note was executed by Robin and made payable to Erica in the amount of $200,000.As a result of the transfer:
A)Erica does not recognize gain.
B)Erica recognizes gain of $400,000.
C)Robin Corporation has a basis of $100,000 in the land.
D)Robin Corporation has a basis of $300,000 in the land.
E)None of the above.
Q3) In a § 351 transaction,if a transferor receives consideration other than stock,the transaction can be taxable.
A)True
B)False
Page 22
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Chapter 19: Corporations: Distributions Not in Complete
Liquidation
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Q1) Which of the following is a correct statement regarding a redemption to pay death taxes under § 303?
A)An estate recognizes gain on the redemption equal to the excess of the distribution proceeds over the decedent's basis in the stock.
B)The value of the stock in the decedent's gross estate must exceed 40% of the value of the adjusted gross estate.
C)The redemption need not satisfy any of the § 302 qualifying stock redemption provisions.
D)A corporation recognizes gains and losses on the distribution of property in the redemption.
E)None of the above.
Q2) At a time when Blackbird Corporation had E & P of $950,000 and 1,000 shares of stock outstanding,the corporation distributed $250,000 to redeem 300 shares of its stock.The transaction qualified as a disproportionate redemption for the shareholder.Blackbird's E & P is reduced by $285,000 as a result of the distribution.
A)True
B)False
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Chapter 20: Distributions in Complete Liquidation and an Overview of Reorganizations
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Q1) If a parent corporation makes a § 338 election,the subsidiary recognizes gains and losses as result of a deemed sale of its assets.
A)True
B)False
Q2) Lyon has 100,000 shares outstanding that are worth $10 per share.It uses 32% of its stock plus $80,000 to acquire Zebra Corporation in a "Type A" reorganization.Zebra's assets are valued at $400,000 and its accumulated earnings and profits are $25,000 at the time of the reorganization.The Lyon shares and cash are distributed to the Zebra shareholders as follows.Jake (owning 62.5% of Zebra)receives 18,000 shares (value $180,000)and $70,000.Kara (owning 320.5% of Zebra)receives 14,000 shares (value $140,000)and $10,000.Jake and Kara each recognize gains to the extent of the cash they received.What is the character of Jake's and Kara's gains?
Q3) Debt security holders recognize gain when the principal amount of the securities received is greater than the principal amount given up.
A)True
B)False
Q4) Describe the requirements for and tax consequences of a § 338 election.
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Chapter 21: Partnerships
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Q1) A distribution from a partnership to a partner is not generally taxable to the partner.
A)True
B)False
Q2) On a partnership's Form 1065,which of the following statements is always true?
A)The partnership will reconcile ordinary income from operations (excluding separately stated items)to book income on Schedule M-1 or M-3.
B)The partnership balance sheet is required to be presented on a tax basis.
C)All partnership income and expense items are reported on Form 1065,page 1.
D)The partnership's equivalent of taxable income is reported in the "Analysis of Income (Loss)."
E)All of the above statements are true.
Q3) For Federal income tax purposes,a distribution from a partnership to a partner is treated the same as a distribution from a C corporation to its shareholders.
A)True
B)False
Q4) The "inside basis" is defined as a partner's basis in the partnership interest.
A)True
B)False
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Chapter 22: S Corporations
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Q1) The taxable LIFO recapture amount equals the excess of the inventory's value under ____________________ over the ____________________ value.
Q2) The § 1202 exclusion of gain on disposition of S corporation stock is not available.
A)True
B)False
Q3) A cash basis calendar year C corporation in Athens,Georgia,has $100,000 of accounts receivable on the date of its conversion to an S corporation on February 14.By the end of the year,$70,000 of these receivables are collected.Calculate any built-in gains tax,assuming that there is sufficient taxable income.
A)$0.
B)$10,500.
C)$24,500.
D)$35,000.
E)Some other amount.
Q4) An S corporation may not amortize organizational expenses.
A)True B)False
Q5) Outline the requirements that an entity must meet to elect S corporation status.
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Chapter 23: Exempt Entities
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Q1) Even though a church is not required to obtain IRS approval of its exempt status,it still must file Form 990 (Return of Organization Exempt from Income Tax)annually.
A)True
B)False
Q2) The League of Women Voters is a § 501(c)(3)organization.
A)True
B)False
Q3) What are the common characteristics of organizations that receive exempt status?
Q4) One reason for granting an exemption from Federal income tax to certain organizations is the belief that such organizations can perform certain government-like functions,and thereby reduce the financial burden that would otherwise fall on the Federal government.
A)True
B)False
Q5) Discuss benefits for which an exempt organization may be eligible,other than exemption from Federal income tax.
Q6) A church is not required to obtain IRS approval for its exempt status.
A)True
B)False
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Chapter 24: Multistate Corporate Taxation
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Q1) List which items are included in the payroll factor of a state.Consider all forms of compensation that an employee might receive.Apply the general UDITPA rules in answering this question.
Q2) The throwback rule requires that:
A)Sales of services are attributed to the state of commercial domicile.
B)Capital gain/loss is attributed to the state of commercial domicile.
C)Services are attributed to the state of commercial domicile of the taxpayer,and are not taxable in the state where they were performed.
D)Sales of tangible personal property are attributed to the state where they originated,if the taxpayer is not taxable in the state of destination.
Q3) The corporate income tax provides about one-half of the annual tax revenues for the typical U.S.state.
A)True
B)False
Q4) Polly is an employee of a consulting firm.She spends time working in three different U.S.states.To which state(s)' payroll factor(s)is her compensation assigned? Apply the general UDITPA rules in answering this question.
Q5) Summarize the principles of multistate tax planning.
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Chapter 25: Taxation of International Transactions
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Q1) A U.S.corporation owns 30% of a foreign corporation.The remaining 70% is owned by other foreign corporations not controlled by the U.S.corporation.The functional currency of the foreign corporation is the euro.The U.S.corporation receives a dividend equivalent to 50,000 .If the average exchange rate for the E & P to which the dividend is attributed is 1.2 : $1,the exchange rate at year end is .95 : $1 and on the date of the dividend payment is 1.1 : $1,what is the result to the U.S.corporation on receipt of the dividend?
A)The U.S.corporation receives a dividend of $45,455 and realizes an exchange gain of $3,788 [$45,455 minus $41,667 (50,000 /1.2)].
B)The U.S.corporation receives a dividend of $45,455 (50,000 /1.1)with no exchange gain or loss.
C)The U.S.corporation receives a dividend of $41,667 and realizes an exchange loss of $3,788 ($41,667 minus $45,455).
D)The U.S.corporation receives a dividend of $52,632 (50,000 /.95)with no exchange gain or loss.
Q2) All losses are apportioned against U.S.-source income.
A)True
B)False
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Chapter 26: Tax Practice and Ethics
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Q1) The privilege of confidentiality applies to a CPA tax preparer concerning the client's information relative to:
A)Financial accounting tax accrual workpapers.
B)A tax research memo used to determine an amount reported on the tax return.
C)Building a defense against a penalty assessed for the use of a tax shelter.
D)Building a defense against a charge brought by the SEC.
Q2) Under Circular 230,a return must be signed as a preparer,even if it was completed for no charge as a favor to a friend or relative.
A)True
B)False
Q3) Only the government can appeal a decision of the Tax Court Small Cases Division. A)True
B)False
Q4) A(n)___________________ member is required to follow the Statements of Standards for Tax Services in conducting a tax practice.
Q5) A taxpayer can take a dispute to the Small Cases Division of the Tax Court when the disputed amounts do not exceed $____________________.
Q6) How is the tax law affected by Federal criminal statutes?
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Chapter 27: The Federal Gift and Estate Taxes
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Q1) Homer and Laura are husband and wife.At the time of Homer's prior death in 2009,they owned the following: land as tenants by the entirety worth $2,000,000 (purchased by Homer)and stock as equal tenants in common worth $3,000,000 (purchased by Laura).Laura also owns an insurance policy on Homer's life (maturity value of $1,000,000)with herself as the designated beneficiary.Homer's will passes all his property to Laura.How much marital deduction is allowed Homer's estate?
A)$2,000,000.
B)$2,500,000.
C)$3,500,000.
D)$4,500,000.
E)None of the above.
Q2) The current top Federal transfer tax rate of 45% is the highest that the rate ever has been.
A)True
B)False
Q3) An estate tax is a tax on the right of an heir to receive property on the death of the owner.
A)True
B)False
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Chapter 28: Income Taxation of Trusts and Estates
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Q1) Income beneficiary Molly wants to receive all of the municipal bond interest income of the Brenner Trust.A ____________________ of this sort must be supported by a non-tax economic effect.
Q2) A fiduciary's distribution deduction assures that current-year income is taxed only once.
A)True
B)False
Q3) A trust might be used by a newly elected politician.
A)True
B)False
Q4) If provided for in the trust agreement,a trust might terminate when the income beneficiary reaches age 30.
A)True
B)False
Q5) 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?
Q6) Can a trust or estate claim a deduction for cost recovery? Explain.
Q7) How does the alternative minimum tax affect fiduciary entities?
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Q8) The Form 1041 of a calendar-year trust is due on ____________________ 15.