Federal Income Taxation Practice
Questions
Course Introduction
Federal Income Taxation provides an in-depth introduction to the principles and applications of federal income tax law as it pertains to individuals and businesses. The course covers the fundamentals of gross income, deductions, credits, reporting requirements, and tax rates, as well as the statutory, regulatory, and judicial sources of tax law. Students will analyze case studies, work through practical examples, and discuss current policy issues shaping the U.S. tax system. Emphasis is placed on statutory interpretation, ethical considerations, tax planning, and the broader economic and social impacts of federal tax policy.
Recommended Textbook
South Western Federal Taxation 2018 Comprehensive 41st Edition by William H. Hoffman
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Chapter 1: An Introduction to Taxation and Understanding
the Federal Tax Law
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Q1) The amount of a taxpayer's itemized deductions will increase the chance of being audited by the IRS.
A)True
B)False
Answer: True
Q2) A deduction for certain income from manufacturing activities.
Answer: a
Q3) The Federal excise tax on cigarettes is an example of a proportional tax.
A)True
B)False
Answer: True
Q4) In 2015,Deborah became 65 years old.In 2016 she added a swimming pool,and in 2017 she converted the residence to rental property and moved into an assisted living facility.Since 2014,Deborah's ad valorem property taxes have decreased once and increased twice.Explain.
Answer: The decrease probably came in 2015 when Deborah reached age 65.The increases probably occurred in 2016 when she added the pool and in 2017 when the residence was converted to rental property with the property reassessed due to change in use and/or removal of the homestead exemption.
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Chapter 2: Working With the Tax Law
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Q1) Distinguish between the jurisdiction of the U.S.Tax Court and a U.S.District Court.
Answer: The U.S.Tax Court hears only tax cases and is the most popular tax forum.The U.S.District Court hears a wide variety of nontax cases,including drug crimes and other Federal violations,as well as tax cases.Some Tax Court justices have been appointed from IRS or Treasury Department positions.For these reasons,some people suggest that the U.S.Tax Court has more expertise in tax matters.
Q2) The first codification of the tax law occurred in 1954.
A)True
B)False
Answer: False
Q3) A taxpayer may not appeal a case from which court:
A)U.S. District Court.
B)U.S. Circuit Court of Appeals.
C)U.S. Court of Federal Claims.
D)Small Case Division of the U.S. Tax Court.
E)None of these.
Answer: D
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Page 4
Chapter 3: Computing the Tax
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Sample Questions
Q1) In which,if any,of the following situations will the kiddie tax not apply?
A)The child is married but does not file a joint return.
B)The child has unearned income of $2,100 or less.
C)The child has unearned income that exceeds more than half of his (or her) support.
D)The child is under age 24 and a full-time student.
E)None of these.
Answer: B
Q2) All exclusions from gross income are reported on Form 1040.
A)True
B)False
Answer: False
Q3) Adjusted gross income (AGI) sets the ceiling or the floor for certain deductions.Explain and illustrate what this statement means.
Answer: By a ceiling what is meant is that the deduction cannot exceed a percentage of AGI.Thus,the charitable contribution deduction cannot exceed 50% of a taxpayer's AGI.By a floor what is meant is that a deduction is allowed only if it exceeds a percentage of AGI.Thus,the deduction for medical expenses is limited to the excess of these expenses over 10% of AGI.
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Page 5
Chapter 4: Gross Income: Concepts and Inclusions
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Q1) The annual increase in the cash surrender value of a life insurance policy:
A)Is taxed when the individual dies and the heirs collect the insurance proceeds.
B)Must be included in gross income each year under the original issue discount rules.
C)Reduces the deduction for life insurance expense.
D)Is not included in gross income each year because of the substantial restrictions on gaining access to the policy's value.
E)None of these.
Q2) The constructive receipt doctrine requires that income must be recognized when it is made available to the cash basis taxpayer,although it has not been actually received.The constructive receipt doctrine does not apply to accrual basis taxpayers.
A)True
B)False
Q3) In the case of a zero interest below-market loan by a corporation to a shareholder-employee,what difference does it make to the corporation and the shareholder whether the loan is characterized as a corporation's loan to its shareholder or a corporation's loan to its employee?
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Chapter 5: Gross Income: Exclusions
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Q1) Olaf was injured in an automobile accident and received $25,000 for his physical injury,$50,000 for his loss of income,and $10,000 punitive damages.As a result of the award,the amount Olaf must include in gross income is:
A)$10,000.
B)$50,000.
C)$60,000.
D)$85,000.
E)None of these.
Q2) The taxpayer is a Ph.D.student in accounting at City University.The student is paid $1,500 per month for teaching two classes.The total amount received for the year is $13,500.
A)The $13,500 is excludible if the money is used to pay for tuition and books.
B)The $13,500 is taxable compensation.
C)The $13,500 is considered a scholarship and, therefore, is excluded.
D)The $13,500 is excluded because the total amount received for the year is less than her standard deduction and personal exemption.
E)None of these.
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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Q1) Beulah's personal residence has an adjusted basis of $450,000 and a fair market value of $390,000.Beulah converts the property to rental use this year.The vacation home rules that limit the amount of the deduction to the rental income will apply and the adjusted basis for depreciation is $390,000.
A)True
B)False
Q2) If a vacation home is classified as primarily rental use,a deduction for all of the rental expenses is allowed.
A)True
B)False
Q3) Martha rents part of her personal residence in the summer for 3 weeks for $3,000.Anne rents all of her personal residence for one week in December for $2,500.Anne is not required to include the $2,500 in her gross income whereas Martha is required to include the $3,000 in her gross income.
A)True
B)False
Q4) Under what circumstance can a bribe be deducted?
Q5) Are there any exceptions to the rule that personal expenditures cannot be deducted?
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Chapter 7: Deductions and Losses: Certain Business
Expenses and Losses
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Q1) A business bad debt is a debt unrelated to the taxpayer's trade or business either when it was created or when it became worthless.
A)True
B)False
Q2) If personal casualty gains exceed personal casualty losses (after deducting the $100 floor),there is no itemized deduction.
A)True
B)False
Q3) Which of the following events would produce a deductible loss?
A)Erosion of personal use land due to rain or wind.
B)Termite infestation of a personal residence over a several year period.
C)Damages to personal automobile resulting from a taxpayer's willful negligence.
D)A misplaced diamond ring.
E)None of the above.
Q4) An NOL carryforward is used in determining the current year's charitable contribution deduction.
A)True
B)False
Q5) How is qualified production activities income (QPAI) calculated?
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Chapter 8: Depreciation, cost Recovery, amortization, and Depletion
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Sample Questions
Q1) In 2016,Gail had a § 179 deduction carryover of $30,000.In 2017,she elected § 179 for an asset acquired at a cost of $115,000.Gail's § 179 business income limitation for 2017 is $140,000.Determine Gail's § 179 deduction for 2017.
A)$25,000
B)$115,000
C)$130,000
D)$140,000
E)None of the above
Q2) On May 2,2017,Karen placed in service a new sports utility vehicle that cost $60,000 and has a gross vehicle weight of 6,300 lbs.The vehicle is used 60% for business and 40% for personal use.Determine Karen's total cost recovery for 2017.Karen wants to use both §179 and additional first-year depreciation.
A)$7,200
B)$25,000
C)$27,200
D)$31,600
E)None of the above
Q3) Discuss the requirements in order for startup expenditures to be amortized under § 195.
Page 10
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Chapter 9: Deductions: Employee and
Self-Employed-Related Expenses
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Q1) Concerning the deduction for moving expenses,what circumstances,if any,will excuse a taxpayer from meeting the time test of 39 or 78 weeks?
Q2) 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 away from home.
A)True
B)False
Q3) Which,if any,of the following expenses is subject to the 2%-of-AGI floor?
A)Qualified tuition expenses under § 222.
B)Contribution to traditional IRA.
C)Cost of a CPA exam review course-taxpayer just began employment with an accounting firm.
D)Office in the home deduction for a self-employed taxpayer.
E)None of these.
Q4) Sue was trained by Lynn.
Q5) Education expense that is not deductible to maintain or improve existing skills
Q6) Deductible job-hunting expenses
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Q7) How are combined business/pleasure trips treated for travel within the United States as opposed to foreign travel?
Chapter 10: Deductions and Losses: Certain Itemized
Deductions
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Q1) Matt,a calendar year taxpayer,pays $11,000 in medical expenses in 2017.He expects $5,000 of these expenses to be reimbursed by an insurance company in 2018.In determining his medical expense deduction for 2017,Matt must reduce his 2017 medical expenses by the amount of the reimbursement he expects in 2018.
A)True
B)False
Q2) Capital assets donated to a public charity that would result in long-term capital gain if sold,are subject to the 30%-of-AGI ceiling limitation on charitable contributions for individuals.
A)True
B)False
Q3) In 2017,Brandon,age 72,paid $3,000 for long-term care insurance premiums.He may include the $3,000 in computing his medical expense deduction for the year.
A)True
B)False
Q4) Linda borrowed $60,000 from her parents for a down payment on a condominium.She paid interest of $5,500 in 2015,$0 in 2016,and $9,000 in 2017.The IRS disallowed the deduction.Can you offer any explanation for the disallowance?
Page 12
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Chapter 11: Investor Losses
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Sample Questions
Q1) Dena owns interests in five businesses and has full-time employees in each business.She participates for 100 hours in Activity A,120 hours in Activity B,130 hours in Activity C,140 hours in Activity D,and 125 hours in Activity E.
A)All five of Dena's activities are significant participation activities.
B)Dena is a material participant with respect to all five activities.
C)Dena is not a material participant in any of the activities.
D)Dena is a material participant with respect to Activities B, C, D, and E.
E)None of the above.
Q2) In 2016,Kelly earns a salary of $200,000 and invests $40,000 for a 20% interest in a partnership not subject to the passive activity loss rules.Through the use of $800,000 of nonrecourse financing,the partnership acquires assets worth $1 million.The activity produces a loss of $150,000,of which Kelly's share is $30,000.In 2017,Kelly's share of the loss from the partnership is $15,000.How much of the loss from the partnership can Kelly deduct?
Q3) List the taxpayers that are subject to the passive activity loss rules and summarize the general impact of these rules on these taxpayers.
Q4) Describe the types of activities and taxpayers that are subject to the at-risk rules.
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Chapter 12: Tax Credits and Payments
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Sample Questions
Q1) Realizing that providing for a comfortable retirement is up to them,Jim and Julie commit to making regular contributions to their IRAs,beginning this year.Consequently,they each make a $2,000 contribution to their traditional IRA.If their AGI is $35,000 on their joint return,what is the amount of their credit for certain retirement plan contributions?
A)$2,000
B)$1,000
C)$400
D)$200
E)None of the above
Q2) Juan refuses to give the bank where he maintains a savings account his Social Security number.Juan is subject to backup withholding for the interest earned on the savings account.
A)True
B)False
Q3) An individual generally may claim a credit for adoption expenses in the year in which the expenses are paid.
A)True
B)False
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Page 14
Chapter 13: Property Transactions: Determination of Gain or
Loss, basis Considerations, and Nontaxable Exchanges
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Q1) Identify two tax planning techniques that can be used to avoid the wash sale disallowance of loss.
Q2) Neal and his wife Faye reside in Texas,a community property state.Their community property consists of real estate (adjusted basis of $800,000; fair market value of $6 million) and personal property (adjusted basis of $390,000; fair market value of $295,000).Neal dies first and leaves his estate to Faye.What is Faye's basis in the property after Neal's death?
A)$800,000 real estate and $295,000 personal property.
B)$800,000 real estate and $390,000 personal property.
C)$3,400,000 real estate and $295,000 personal property.
D)$6,000,000 real estate and $295,000 personal property.
E)None of the above.
Q3) The holding period of replacement property where the election to postpone gain is made includes the holding period of the involuntarily converted property.
A)True
B)False
Q4) Maurice sells his personal use automobile at a realized loss.Under what circumstances can Maurice deduct the loss? What if the personal use asset was sold at a realized gain?
Page 15
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Chapter 14: Property Transactions, capital Gains and
Losses, sec1231, and Recapture Provisions
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Q1) Stanley operates a restaurant as a sole proprietorship.Which of the following items are capital assets in the hands of Stanley?
A)The restaurant's tables and chairs.
B)A portable sound system used to play "theme music" for the restaurant.
C)The restaurant building that is an asset of the sole proprietorship.
D)An interest-bearing savings account used to keep the restaurant's excess cash.
E)None of the above.
Q2) Section 1231 applies to the sale or exchange of business properties,but not to personal use activity casualties.
A)True
B)False
Q3) Section 1239 (relating to the sale of certain property between related taxpayers) does not apply unless the property:
A)Was depreciated by the transferor.
B)Is depreciable in the hands of the transferee.
C)Is a capital asset.
D)Is real property.
E)None of the above.
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Chapter 15: Alternative Minimum Tax
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Q1) Marvin,the vice president of Lavender,Inc.,exercises stock options for 100 shares of stock in March 2017.The stock options are incentive stock options (ISOs).Their exercise price is $20 and the fair market value on the date of exercise is $28.The options were granted in March 2013 and all restrictions on the free transferability had lapsed by the exercise date.
A)If Marvin sells the stock in December 2017 for $3,000, his AMT adjustment in 2017 is a positive adjustment of $800.
B)If Marvin sells the stock in December 2018 for $3,000, his AMT adjustment in 2018 is $0.
C)If Marvin sells the stock in December 2017 for $3,000, his AMT adjustment in 2017 is a negative adjustment of $800.
D)If Marvin sells the stock in December 2018 for $3,000, his AMT adjustment in 2018 is a negative adjustment of $1,000.
E)None of the above.
Q2) What tax rates apply in calculating the TMT for an individual taxpayer?
Q3) Durell owns a construction company that builds residential housing.The company is eligible to use the completed contract method for regular income tax purposes.What can Durell do to minimize his AMT?
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Chapter 16: Accounting Periods and Methods
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Q1) Snow Corporation began business on May 1,2017,and elected to use the calendar year for tax purposes.Brown Corporation,a calendar year corporation,sold all of its assets and liquidated as of April 30,2017.Neither Snow Corporation nor Brown Corporation must annualize their income for their 2017 returns.
A)True
B)False
Q2) In the case of a small home construction company that builds under long-term contracts,generally:
A)The percentage of completion method is required to report the income from the construction contracts.
B)The percentage of completion method can be elected and generally will defer income until the contract is completed.
C)The completed contract method can be used and generally will defer income.
D)The accrual method must be used because inventories are an income-producing factor.
E)None of the above is true.
Q3) Using your knowledge of GAAP and financial reporting,list and explain one good reason why GAAP should not be used for tax purposes and one good reason why it should be used.
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Page 18
Chapter 17: Corporations: Introduction and Operating Rules
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Q1) During the current year,Violet,Inc.,a closely held corporation (not a PSC),has $55,000 of passive activity loss,$80,000 of net active income,and $20,000 of portfolio income.How much is Violet's taxable income for the current year?
A)$20,000
B)$45,000
C)$80,000
D)$100,000
E)None of the above
Q2) Albatross,a C corporation,had $140,000 net income from operations and a $25,000 short-term capital loss in the current year.Albatross Corporation's taxable income is $140,000.
A)True
B)False
Q3) A personal service corporation must use a calendar year,and is not permitted to use a fiscal year.
A)True
B)False
Q4) Briefly describe the accounting methods available for adoption by a C corporation.
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Chapter 18: Corporations: Organization and Capital Structure
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Q1) Eileen transfers property worth $200,000 (basis of $190,000) to Goldfinch Corporation.In return,she receives 80% of the stock in Goldfinch Corporation (fair market value of $180,000) and a long-term note (fair market value of $20,000) executed by Goldfinch and made payable to Eileen.Eileen recognizes gain on the transfer of: A)$0.
B)$10,000.
C)$20,000.
D)$190,000.
E)None of the above.
Q2) Rachel owns 100% of the stock of Cardinal Corporation.In the current year Rachel transfers an installment obligation,tax basis of $180,000 and fair market value of $350,000,for additional stock in Cardinal worth $350,000.
A)Rachel has a taxable gain of $180,000.
B)Rachel has a taxable gain of $170,000.
C)Rachel recognizes no gain on the transfer.
D)Rachel has a basis of $350,000 in the additional stock she received in Cardinal Corporation.
E)None of the above.
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Chapter 19: Corporations: Distributions Not in Complete
Liquidation
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Q1) The tax treatment of corporate distributions at the shareholder level does not depend on:
A)The character of the property being distributed.
B)The earnings and profits of the corporation.
C)The basis of stock in the hands of the shareholder.
D)Whether the distributed property is received by an individual or a corporation.
E)None of the above.
Q2) Bristlebird Corporation (E & P of $700,000) has 3,000 shares of common stock outstanding.Juan owns 1,500 shares and his wife,Roberta,owns 1,500 shares.Juan and Roberta each have a basis of $90,000 in their Bristlebird stock.In the current year,Bristlebird Corporation redeems 1,000 shares from Juan for $250,000.With respect to the distribution in redemption of the Bristlebird stock:
A)Juan has dividend income of $250,000.
B)Juan has dividend income of $190,000.
C)Juan has a capital gain of $250,000.
D)Juan has a capital gain of $190,000.
E)None of the above.
Q3) Loss on sale between related parties in 2017.
Q4) Provide a brief outline on computing current E & P.
Page 21
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Chapter 20: Corporations: Distributions in Complete
Liquidation and an Overview of Reorganization
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Q1) Mary and Jane,unrelated taxpayers,own Gray Corporation's stock equally.One year before the complete liquidation of Gray,Mary transfers land (basis of $200,000,fair market value of $130,000) to Gray Corporation as a contribution to capital.Assume that Mary also contributed other property in the same transaction having a basis of $20,000 and fair market value of $100,000.In liquidation,Gray distributes the land to Jane.At the time of the liquidation,the land is worth $110,000.
a.How much loss, if any, may Gray Corporation recognize on the distribution of the land to Jane?
b.Assume that the transfer of land to Gray Corporation was made so that the corporation could subdivide the land and build residential housing. However, a subsequent deterioration of the housing market forced Gray Corporation to abandon its plans. What amount of loss may Gray Corporation recognize on the distribution of the land to Jane?
Q2) For a corporate restructuring to qualify as a tax-free reorganization,the step transaction doctrine must apply.
A)True
B)False
Q3) Discuss the role of letter rulings in corporate reorganizations.
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Chapter 21: Partnerships
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Q1) SQRLY LLC has about 25 LLC members.SwanCo (30% owner) and QuinnCo (16% owner) both have June 30 tax year ends.Royce,Inc.; Larry,Inc.; and Yolanda,Inc.each own 4% (12% total) and have September 31 taxable year ends.The other LLC members (42% total) each own interests of 4% or less and use the calendar year (December 31).Which one of the following statements is true regarding the LLC's taxable year end?
A)The taxable year is determined under the least aggregate deferral rule and is December 31.
B)The taxable year is determined under the least aggregate deferral rule and is June 30.
C)The taxable year is determined under the majority interest rule and is December 31.
D)The taxable year is determined under the principal partner rule and is June 30.
E)The taxable year is determined under the least aggregate deferral rule and is September 30.
Q2) Limited partnership
Q3) Limited liability partnership
Q4) Schedule K-1
Q5) Economic effect test
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Chapter 22: S Corporations
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Q1) Stock basis first is increased by income items,then ____________________ by distributions,and finally decreased by ____________________.
Q2) Form 1120S provides an S shareholder's computation of his or her stock basis.
A)True
B)False
Q3) Identify a disadvantage of being an S corporation.
A)Estates can be shareholders.
B)Losses flow through immediately to the shareholders.
C)The AMT on corporations is avoided.
D)Tax-exempt income flows through as excludible to shareholders.
E)None of the above is a disadvantage of the S election.
Q4) Liabilities affect the owner's basis differently in an S corporation than they do in a partnership.
A)True
B)False
Q5) Most limited liability partnerships can own stock in an S corporation.
A)True
B)False
Q6) Some ____________________and taxation rules apply to an S corporation.
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Q7) Non-separately computed loss ____________________ a S shareholder's stock basis.
Chapter 23: Exempt Entities
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Q1) Maroon,Inc.,a tax-exempt organization,leases a building and equipment to Brown Partnership.The rental income from the building is $100,000 and from the equipment is $9,000.Rental expenses are $40,000 for the building and $4,000 for the equipment.What adjustment must be made to net unrelated business income?
A)$0
B)($60,000)
C)($65,000)
D)($109,000)
Q2) Which of the following statements regarding the unrelated business income tax is correct?
A)Private foundations are subject to the unrelated business income tax.
B)Bingo games are not subject to the unrelated business income tax if they are conducted by an exempt organization.
C)The exchange or rental of membership lists with other exempt and nonexempt organizations is not an unrelated trade or business.
D)All of the above statements are correct.
E)None of the above statements is correct.
Q3) Form 990
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Chapter 24: Multistate Corporate Taxation
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Q1) Most states exempt consumer purchases of groceries from the collection of the local sales tax.
A)True
B)False
Q2) Politicians frequently use tax credits and exemptions to create economic development incentives.
A)True
B)False
Q3) Anders,a local business,wants your help in making a decision about a large capital investment.To assist your client,list several tax and non-tax implications of the decision.
Q4) Almost all of the states assess some form of consumer-level sales/use tax.
A)True
B)False
Q5) S corporations flow-through income amounts to its shareholders,and most states require a withholding of shareholder taxes on the allocated amounts.
A)True
B)False
Q6) An ad valorem property tax is based on the asset's current
26
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Chapter 25: Taxation of International Transactions
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Q1) Columbia,Inc.,a U.S.corporation,receives a $150,000 cash dividend from Starke,Ltd.Columbia owns 15% of Starke.Starke's E & P is $2 million and it has paid foreign taxes of $750,000 attributable to that E & P.What is Columbia's foreign tax credit related to the Starke dividend?
A)$22,500
B)$56,250
C)$150,000
D)$750,000
Q2) USCo,a U.S.corporation,reports worldwide taxable income of $1,500,000,including a $300,000 dividend from ForCo,a wholly-owned foreign corporation.ForCo's undistributed earnings and profits are $15 million and it has paid $10 million of foreign income taxes attributable to these earnings.What is USCo's deemed paid foreign tax credit related to the dividend received (before consideration of any limitation)?
A)$200,000
B)$300,000
C)$10 million
D)$15 million
Q3) A deemed paid foreign tax credit is included in gross income.
Q4) Maximum years for a foreign tax credit carryforward.
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Chapter 26: Tax Practice and Ethics
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Q1) Attorneys are allowed an "attorney-client privilege" of confidentiality with clients.Does a CPA tax preparer enjoy the same privilege? On which types of tax and financial work?
Q2) Which statement is correct as to the conduct of IRS income tax audits?
A)Office audits are conducted at the office of the IRS.
B)An office audit involves a line-by-line review of the taxpayer's return.
C)The most common type of Federal income tax audit is the field audit.
D)A correspondence audit usually is concluded after a meeting with the taxpayer at the IRS auditor's office.
Q3) An IRS letter ruling might determine that an employee's compensation is unreasonable in amount.
A)True
B)False
Q4) Evaluate this statement: the audited taxpayer has more freedom to "trade issues" with the IRS when the dispute progresses to an Appeals conference.Hint: What are the "hazards of litigation?"
Q5) Failure to deposit withholding tax.
Q6) Failure to file a tax return.
Q7) Willful and reckless conduct.
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Chapter 27: The Federal Gift and Estate Taxes
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Q1) To avoid the terminable interest limitation on the marital deduction,a QTIP election must be made.
A)True
B)False
Q2) Matt and Patricia are husband and wife and live in Oregon.In 2000 and using her funds,Patricia purchases a residence for $400,000,listing title to the property as "Matt and Patricia,joint tenants with right of survivorship." In 2018,Matt dies first when the residence is worth $2 million.A correct statement as to these transactions is:
A)In 2018, Matt's gross estate includes $1 million and a marital deduction of $1 million is allowed for estate tax purposes.
B)In 2000, Patricia made a gift to Matt but no marital deduction is available for gift tax purposes.
C)In 2000, Patricia did not make a gift to Matt.
D)In 2018, Matt's estate includes nothing as to the property.
E)None of the above.
Q3) In full settlement of her marital rights,Henry transfers property to his wife,Nancy.Three months later,Henry and Nancy are divorced.
Q4) Future interest
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Chapter 28: Income Taxation of Trusts and Estates
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Q1) The trust usually makes a distribution to the income beneficiaries in the amount of its fiduciary ____________________ income.
Q2) One-fourth of the Cruger Estate's distributable net income consists of net long-term capital gains.Thus,when income beneficiary Susie receives a $40,000 income distribution from the estate,$10,000 of it qualifies for the 15%/20% tax rate.
A)True
B)False
Q3) Which of the following taxpayers can be subject to an entity-level Federal income tax?
A)Complex trust.
B)Partnership.
C)Limited liability company.
D)All of the above taxpayers are passthrough entities, and they never are subject to an entity-level Federal income tax.
Q4) A Form 1041 must be filed by a trust that has $____________________or more gross income for the tax year.
Q5) Identify the parties that are present when an estate is created,and their key duties.Then do the same for a trust.
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