Federal Tax Research Question
Bank
Course Introduction
Federal Tax Research is a comprehensive course that equips students with the skills and methodologies necessary to effectively conduct tax research in the context of federal taxation. The course emphasizes the identification, interpretation, and application of primary and secondary sources of tax law, including the Internal Revenue Code, Treasury Regulations, IRS rulings, and judicial decisions. Students learn to critically analyze complex tax issues, utilize professional tax research tools, and communicate their findings through well-organized memoranda and reports. Through practical exercises and real-world case studies, the course prepares students for careers in tax accounting, law, or advisory by fostering analytical thinking and professional judgment in dealing with federal tax matters.
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) If an income tax return is not filed by a taxpayer,there is no statute of limitations on assessments of tax by the IRS.
A)True
B)False
Answer: True
Q2) The principal objective of the FUTA tax is to provide some measure of retirement security.
A)True
B)False Answer: False
Q3) A safe and easy way for a taxpayer to avoid local and state sales taxes is to have the purchase sent to an address in another state that levies no such taxes.
A)True
B)False Answer: False
Q4) Some states have offered income tax amnesty programs on more than one occasion.
A)True
B)False Answer: True
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Chapter 2: Working With the Tax Law
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Q1) Which trial court hears only tax disputes?
A)U.S.District Court.
B)U.S.Tax Court.
C)U.S.Court of Federal Claims.
D)U.S.Circuit Courts of Appeals.
E)None of the above.
Answer: B
Q2) Accessing tax documents through electronic means offers limited advantages over a strictly paper-based approach.
A)True
B)False
Answer: False
Q3) Which of the following types of Regulations has the highest tax validity?
A)Temporary.
B)Legislative.
C)Interpretative.
D)Procedural.
E)None of the above.
Answer: B
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Page 4
Chapter 3: Computing the Tax
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Q1) In January 2010,Jake's wife dies and he does not remarry.For tax year 2010,Jake may not be able to use the filing status available to married persons filing joint returns.
A)True
B)False
Answer: True
Q2) A dependent cannot claim a personal exemption on his or her own return.
A)True
B)False
Answer: True
Q3) Which of the following items,if any,is deductible?
A)Parking expenses incurred in connection with jury duty-taxpayer is a dentist.
B)Contributions to mayor's reelection campaign.
C)Substantiated gambling losses (not in excess of gambling winnings)incurred on a vacation to Reno.
D)Speeding ticket incurred while on business.
E)Premiums paid on personal life insurance policy.
Answer: C
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Page 5
Chapter 4: Gross Income: Concepts and Inclusions
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Q1) With respect to income from services,which of the following is true?
A)The income is always amortized over the period the services will be rendered by an accrual basis taxpayer.
B)A cash basis taxpayer can spread the income from a 12-month service contract over the contract period.
C)If an accrual basis taxpayer sells a 24-month service contract on July 1,2010,for $2,400,the taxpayer's 2011 gross income from the contract is $1,800.
D)If the accrual basis taxpayer sells a 12-month service contract on July 1,2010,all of the income is recognized in 2011.
E)None of the above.
Q2) Rhonda has a 30% interest in the capital and profits of the ABC Partnership.Her share of the profits for 2010 was $60,000.She withdrew $40,000 from the partnership in 2010.In January 2011,after her share of the profits for 2010 had been computed,she withdrew her remaining $20,000 share of 2010 profits.As a result,Rhonda must recognize $40,000 of gross income in 2010 and $20,000 in 2011.
A)True
B)False
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Page 6
Chapter 5: Gross Income: Exclusions
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Q1) On January 1,2000,Yellow corporation issued 6% 25-year bonds at par and used the $10,000,000 proceeds to finance the construction of a new plant.On January 1,2010,the company acquired the bonds on the open market for $9,500,000.Assuming that Yellow 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.
Q2) Generally,a U.S.citizen is not required to include in gross income the salary and wages earned while working in a foreign country if the foreign country taxes the income. A)True B)False
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) The income of a sole proprietorship are reported on Schedule C (Profit or Loss from Business).
A)True
B)False
Q2) Describe the circumstances under which a taxpayer can receive rent income from a personal residence,but does not have to report it as gross income.
Q3) Agnes is the sole shareholder of Violet,Inc.For 2010,she receives from Violet a salary of $200,000 and dividends of $100,000.Violet's taxable income for 2010 is $500,000.On audit,the IRS treats $50,000 of Agnes's salary as unreasonable.Which of the following statements is correct?
A)Agnes's gross income will increase by $50,000 as a result of the IRS adjustment.
B)Violet's taxable income will not be affected by the IRS adjustment.
C)Agnes's gross income will decrease by $50,000 as a result of the IRS adjustment.
D)Violet's taxable income will increase by $50,000 as a result of the IRS adjustment.
E)None of the above is correct.
Q4) What losses are deductible by an individual taxpayer?
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Page 8
Chapter 7: Deductions and Losses: Certain Business
Expenses and Losses
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Sample Questions
Q1) Peggy is in the business of factoring accounts receivable.Last year,she purchased a $30,000 account receivable for $25,000.This year,the account was settled for $18,000.How much loss can Peggy deduct and in which year?
A)$5,000 for the current year.
B)$5,000 for the prior year and $7,000 for the current year.
C)$7,000 for the current year.
D)$12,000 for the current year.
E)None of the above.
Q2) In determining whether a debt is a business or nonbusiness bad debt,the debtor's use of the borrowed funds is important.
A)True
B)False
Q3) The amount of a farming loss cannot exceed the amount of the taxpayer's NOL for the taxable year.
A)True
B)False
Q4) A farming NOL may be carried back 5 years.
A)True
B)False
Page 9
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Chapter 8: Depreciation,cost Recovery,amortization,and Depletion
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Q1) ADS 150% declining-balance depreciation is used to compute earnings and profits.
A)True
B)False
Q2) Barry purchased a used business asset (seven-year property)on November 30,2010,at a cost of $200,000.This is the only asset he purchased during the year.Barry did not elect to expense any of the asset under § 179,nor did he elect straight-line cost recovery.Barry sold the asset on July 17,2011.Determine the cost recovery deduction for 2011.
A)$19,133.
B)$24,490.
C)$34,438.
D)$55,100.
E)None of the above.
Q3) A taxpayer may elect to use the alternative depreciation system (ADS)on property used predominantly outside the United States.
A)True
B)False
Q4) Antiques are not eligible for cost recovery.
A)True
B)False
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Chapter 9: Deductions: Employee and
Self-Employed-Related Expenses
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Q1) The total of traditional deductible,traditional nondeductible,and Roth IRA contributions in 2010 may not exceed $5,000 per year for a taxpayer age 39.
A)True
B)False
Q2) A worker may prefer to be classified as an employee (rather than an independent contractor)for which of the following reasons:
A)To avoid the self-employment tax.
B)To claim unreimbursed work-related expenses as a deduction for AGI.
C)To avoid the cutback adjustment on unreimbursed business entertainment expenses.
D)To avoid the 2%-of-AGI floor on unreimbursed work-related expenses.
E)None of the above.
Q3) Alexis (a CPA and JD)sold her public accounting practice in Des Moines and accepted a job with the Seattle office of a national law firm.Her moving expenses are not deductible because she has changed employment status (i.e. ,went from self-employed to employee)and changed occupations (i.e. ,practice of public accounting to practice of law).
A)True B)False
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Chapter 10: Deductions and Losses: Certain Itemized
Deductions
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Q1) Mindy paid an appraiser to determine how much a capital improvement made for medical reasons increased the value of her personal residence.The appraisal fee qualifies as a deductible medical expense.
A)True
B)False
Q2) 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.
Q3) Linda borrowed $60,000 from her parents for a down payment on a condominium.She paid interest of $5,500 in 2008,$0 in 2009,and $9,000 in 2010.The IRS disallowed the deduction.Can you offer any explanation for the disallowance?
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Chapter 11: Investor Losses
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Q1) Nick,an attorney,owns a separate business (not real estate)in which he participates.He has one employee who works part-time in the business.
A)If Nick participates for 500 hours and the employee participates for 520 hours during the year,Nick qualifies as a material participant.
B)If Nick participates for 600 hours and the employee participates for 1,000 hours during the year,Nick qualifies as a material participant.
C)If Nick participates for 120 hours and the employee participates for 120 hours during the year,Nick does not qualify as a material participant.
D)If Nick participates for 95 hours and the employee participates for 5 hours during the year,Nick probably does not qualify as a material participant.
E)None of the above.
Q2) Wolf Corporation has active income of $55,000 and a passive loss of $33,000 in the current year.Wolf cannot deduct the $33,000 loss if it is a closely held C corporation that is not a personal service corporation.
A)True
B)False
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Chapter 12: Tax Credits and Payments
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Q1) In March 2010,Gray Corporation hired two individuals,both of whom were certified as long-term recipients of family assistance benefits.Each employee was paid $11,000 during 2010.Only one of the individuals continued to work for Gray Corporation in 2011,earning $9,000 during the year.No additional workers were hired in 2011.Gray Corporation's work opportunity tax credit amounts for 2010 and 2011 are:
A)$4,000 in 2010,$4,000 in 2011.
B)$8,000 in 2010,$4,500 in 2011.
C)$8,000 in 2010,$5,000 in 2011.
D)$8,000 in 2010,$9,000 in 2011.
E)None of the above.
Q2) The American Opportunity credit is available per eligible student,while the lifetime learning credit is calculated per taxpayer.
A)True
B)False
Q3) Unused foreign tax credits can be carried back one year and forward fifteen years.
A)True
B)False
Q4) Discuss the treatment of unused general business credits.
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Page 14
Chapter 13: Part 1--Property Transactions: Determination of
Gain or Loss,basis Considerations,and Nontaxable Exchanges
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Q1) Rob was given a residence in 2010.At the time of the gift,the residence had a fair market value of $200,000,and its adjusted basis to the donor was $140,000.The donor paid a gift tax of $10,000 on the taxable gift of $188,000.What is Rob's basis for gain?
A)$140,000.
B)$143,209.
C)$150,000.
D)$200,000.
E)None of the above.
Q2) When a taxpayer has purchased several lots of stock on different dates at different purchase prices and cannot identify the lot of stock that is being sold,he may choose which lot of stock is deemed to be sold.
A)True
B)False
Q3) The exchange of unimproved real property located in Topeka (KS)for improved real property located in Atlanta (GA)qualifies as a like-kind exchange.
A)True
B)False
Page 15
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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) Nigel purchased a blending machine for $125,000 for use in his business.As to the machine,he has deducted MACRS cost recovery of $31,024,maintenance costs of $5,200,and repair costs of $4,000.Calculate Nigel's adjusted basis for the machine.
Q2) Taxpayer's principal residence is destroyed by a tornado.Taxpayer is single and his realized gain is $400,000.Is it possible for the taxpayer's recognized gain to be $0?
Q3) What is the difference between the depreciation (or cost recovery)allowed and the depreciation (or cost recovery)allowable and what effect does each have on the adjusted basis of property?
Q4) Evelyn's office building is destroyed by fire on July 12,2010.The adjusted basis is $272,000.She receives insurance proceeds of $300,000 on August 31,2010.Calculate the amount that Evelyn must reinvest in qualifying property in order that her recognized gain be $15,000.Assume she elects § 1033 (nonrecognition of gain from an involuntary conversion)postponement treatment.
Q5) Mitchell owned an SUV that he had purchased two years ago for $48,000 and which he transfers to his sole proprietorship.How is the sole proprietorship's basis for the SUV calculated? What additional information does Mitchell need?
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Chapter 14: Property Transactions: Capital Gains and Losses,1231,and
Recapure Provisions
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Q1) Cason is filing as single and has 2010 taxable income of $38,000 which includes $36,000 of 0%/15% net long-term capital gain.What is his tax on taxable income using the alternative tax method?
A)$0.
B)$800.
C)$1,837.
D)$5,681.
E)None of the above.
Q2) If there is a net § 1231 loss,it is treated as a short-term capital loss.
A)True
B)False
Q3) Barbara has the following results of netting her short-term and long-term capital gains and losses for 2010: $36,000 short-term capital loss,$22,000 net long-term capital gain ($21,000 0%/15% long-term capital gain,and $1,000 28% long-term capital gain).What is her net capital gain or loss for 2010 and,if there is a net capital loss,how much of the loss and what type of loss carries over to 2011?
Q4) Section 1231 property generally does not include musical compositions.
A)True
B)False
Page 17
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Chapter 15: Alternative Minimum Tax
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Q1) Assuming no phaseout,the AMT exemption amount for married taxpayers filing jointly for 2010 is the same as the AMT exemption amount for C corporations.
A)True
B)False
Q2) If the AMT base is not 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
Q3) If Faye's standard deduction exceeds her itemized deductions,there will be no AMT adjustment.
A)True
B)False
Q4) AMT adjustments can be both positive and negative in calculating AMTI,whereas AMT tax preferences can be only positive.
A)True
B)False
Q5) For the ACE adjustment,discuss the relationship between ACE and unadjusted AMTI.
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) When the IRS requires a taxpayer to change accounting methods:
A)The taxpayer may be subject to penalties and interest.
B)The taxpayer generally is required to make the change as of the beginning of the earliest open year.
C)The adjustments due to the change cannot be spread over subsequent years.
D)All of the above are correct.
E)None of the above is correct.
Q3) Snow Corporation was a calendar year corporation that sold all of its assets and liquidated as of April 30,2010.The corporation is not required to annualize its income for its final year of operations.
A)True B)False
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Chapter 17: Corporations: Introduction and Operating Rules
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Q1) Ted is the sole shareholder of a C corporation,and Sue owns a sole proprietorship.Both businesses were started in 2010,and each business sustained a $5,000 net capital loss for the year.Which of the following statements is correct?
A)Ted's corporation can deduct the $5,000 capital loss in 2010.
B)Ted's corporation can deduct $3,000 of the capital loss in 2010.
C)Sue can carry the capital loss back three years and forward five years.
D)Sue can deduct the $5,000 capital loss against ordinary income in 2010.
E)None of the above.
Q2) Schedule M-1 of Form 1120 is used to reconcile financial net income with taxable income reported on the corporation's income tax return as follows: net income per books + additions - subtractions = taxable income.Which of the following items is a subtraction on Schedule M-1.
A)Book depreciation in excess of allowable tax depreciation.
B)Federal income tax per books.
C)Premiums paid on life insurance policy on key employee.
D)Tax-exempt interest.
E)None of the above.
Q3) 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) To help avoid the thin capitalization problem,it is advisable to make the repayment of the debt contingent upon the corporation's earnings.
A)True
B)False
Q2) Similar to like-kind exchanges,the receipt of "boot" under § 351 can cause gain to be recognized.
A)True
B)False
Q3) In determining whether § 357(c)applies,assess whether the liabilities involved exceed the bases of all assets a shareholder transfers to the corporation.
A)True
B)False
Q4) Issues relating to basis arise when a taxpayer is involved in a § 351 transaction.Describe the underlying rules,and the purpose they serve.
Q5) If a shareholder owns stock received as a gift from her mother,it cannot be § 1244 stock.
A)True
B)False
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Chapter 19: Corporations: Distributions Not in Complete
Liquidation
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Q1) The gross estate of Raul,decedent who died in 2009,includes 700 shares of stock of Orange Corporation (basis to Raul of $400,000,fair market value on date of death of $3 million).The estate will incur $2 million of death taxes and funeral and administration expenses,and the adjusted gross estate is $8 million.Denise,Raul's daughter and sole heir of his estate,owns the remaining 300 shares of Orange Corporation's (1,000)shares outstanding.In the current year,Orange (E & P of $4 million)redeems all of the estate's 700 shares for $3 million.What are the tax consequences of the redemption to Raul's estate?
Q2) At the beginning of the current year,Dan and Andy each own 50% of Swallow Corporation.In July,Dan sold his stock to Kim for $140,000.At the beginning of the year,Swallow Corporation had accumulated E & P of $240,000 and its current E & P is $280,000 (prior to any distributions).Swallow distributed $300,000 on March 10 ($150,000 to Dan and $150,000 to Andy)and distributed another $300,000 on October 1 ($150,000 to Kim and $150,000 to Andy).Kim has dividend income of:
A)$70,000.
B)$110,000.
C)$140,000.
D)$150,000.
E)None of the above.
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Chapter 20: Distributions in Complete Liquidation and an
Overview of Reorganizations
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Q1) Legal dissolution under state law is not required for a liquidation to be complete for tax purposes.
A)True
B)False
Q2) One similarity between the tax treatment accorded nonliquidating and liquidating distributions is with respect to the recognition of losses by the distributing corporation.As a general rule,a corporation recognizes losses on both nonliquidating and liquidating distributions of depreciated property (fair market value less than basis).
A)True
B)False
Q3) The tax basis of the stock and securities received by a shareholder pursuant to a tax-free reorganization generally is the same as the basis of the stock and securities surrendered.
A)True
B)False
Q4) In a corporate liquidation governed by § 332,what considerations should be given in the distribution of property to a minority shareholder?
Q5) Describe the requirements for and tax consequences of a § 338 election.
Page 23
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Chapter 21: Partnerships
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Q1) Marcie is a 40% member of the M&A LLC.Her basis is $40,000 immediately before the LLC distributes to her $30,000 of cash and land (basis to the LLC of $20,000 and fair market value of $25,000).As a result of the proportionate,nonliquidating distribution,Marcie recognizes a gain of $15,000 and her basis in the land equals its fair market value of $25,000.
A)True
B)False
Q2) A partnership must provide any information to the partners that the partners would need to calculate deductions not permitted at the partnership level,such as for oil and gas depletion or the corporate dividends received deduction.
A)True
B)False
Q3) Julie owns property that is treated as a capital asset in her hands.She contributed a parcel of land (basis $60,000;fair market value $58,000)to a real estate partnership,which will hold it as inventory.After three years,the partnership sells the land for $56,000.The partnership will recognize a $4,000 ordinary loss on sale of the property.
A)True
B)False
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Chapter 22: S Corporations
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Q1) A capital loss allocated to a shareholder always reduces the other adjustments account.
A)True
B)False
Q2) Claude Bergeron sold 1,000 shares of Ditta,Inc. ,an S corporation located in Concord,North Carolina,for $9,000.He had owned the stock for three years and had a stock basis of $107,000 in the shares.Assuming that Claude is single and that he is the original owner of these § 1244 stock shares,calculate the appropriate tax treatment of any gain or loss.
A)No gain or loss.
B)$50,000 LTCL;$48,000 ordinary deduction.
C)$50,000 ordinary deduction;$48,000 LTCL.
D)$98,000 long-term capital loss.
E)None of the above.
Q3) Your client is a C corporation that wishes to convert to S status.Advise this corporation with respect to minimizing any § 1374 built-in gains tax.
Q4) All items (e.g. ,income,losses)are allocated to each shareholder based upon ____________________ ownership throughout the year.
Q5) Explain the OAA concept in S corporation taxation.
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Chapter 23: Exempt Entities
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Q1) Which of the following are organizations exempt under § 501(c)(3)?
A)Girl Scouts of America.
B)Washington and Lee University.
C)League of Women Voters.
D)Only a.and b.are § 501(c)(3)organizations.
E)All of the above are § 501(c)(3)organizations.
Q2) Swan,Inc. ,a tax-exempt organization,leases a building and equipment to ABC Corporation.The rental income from the building is $160,000 and from the equipment is $12,000.Rental expenses are $100,000 for the building and $11,000 for the equipment.What adjustment must be made to net unrelated business income?
A)$0.
B)($11,000).
C)($12,000).
D)($61,000).
E)Some other amount.
Q3) Certain exempt organizations can engage in lobbying to the same extent as for-profit corporations.
A)True
B)False
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Chapter 24: Multistate Corporate Taxation
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Q1) Identify some state/local income tax issues facing pass-through entities such as S corporations,partnerships,and LLCs.
Q2) ____________________ is a method under which specific components of a corporation's income are directly assigned to a specific state.
Q3) Only a few states have adopted an alternative minimum tax,similar to the Federal system.
A)True
B)False
Q4) State and local politicians tend to apply new and increased taxes to taxpayers who are visitors to the jurisdiction and cannot vote to reelect the lawmaker.
A)True
B)False
Q5) 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.
Q6) In a few states,a Federal S corporation is exempt from state corporate income tax only if ____________________ of its shareholders are state residents.
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Chapter 25: Taxation of International Transactions
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Sample Questions
Q1) A controlled foreign corporation (CFC)realizes Subpart F income from:
A)Purchase of inventory from unrelated party and sale to anyone outside the CFC country.
B)Services performed for the U.S.parent in a country in which the CFC was organized.
C)Purchase of inventory from a related party and sale to anyone outside the CFC country.
D)Services reformed on behalf of an unrelated party in a country outside the country in which the CFC was organized.
E)None of the above transactions.
Q2) The transfer of the assets of a foreign branch (of a U.S.corporation)to a newly formed foreign corporation is always tax deferred under § 351.
A)True
B)False
Q3) All of an NRA's U.S.-source income that is not effectively connected with a U.S.trade or business is subject to a flat U.S.income tax rate of 30% unless modified by a treaty.
A)True
B)False
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Chapter 26: Tax Practice and Ethics
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135 Verified Questions
135 Flashcards
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Sample Questions
Q1) Why should the tax practitioner study the workings of the IRS?
Q2) If a taxpayer is audited by the IRS and is unwilling to accept the findings of the agent,how does the taxpayer's audit strategy change when the dispute is taken to the IRS Appeals Division? Hint: What are the "hazards of litigation?"
Q3) Describe how the IRS applies interest rules in the context of a tax controversy.
Q4) A CPA and a taxpayer can keep a document confidential from the IRS unless it relates to a ____________________ or a ____________________ proceeding against the taxpayer.
Q5) When a tax issue is taken to court,the burden of proof is on the taxpayer to show that the items reported on the return are substantiated.
A)True B)False
Q6) The taxpayer can avoid a valuation penalty for overstating the value of a charitable contribution by showing that the deduction claimed was based on a qualified
Q7) List several current initiatives that the IRS has undertaken in its effort to enforce the revenue laws of the U.S.
Q8) How is the tax law affected by Federal criminal statutes?
Page 29
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Chapter 27: The Federal Gift and Estate Taxes
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Sample Questions
Q1) Daniel's will provides that all of his property passes to a trust,life estate to his wife,remainder to charity.If Daniel's executor does not make a QTIP election,the use of the alternate valuation date is possible.
A)True
B)False
Q2) Pursuant to Corey's will,Emma (Corey's sister)inherits his property.Emma dies later.The estate tax attributable to the inclusion of the property in Corey's gross estate was $300,000.The estate tax attributable to the inclusion of the property in Emma's gross estate is $400,000.Emma's credit for the tax on prior transfers (under§ 2013)is:
A)$0 if Emma died 9 1/2 years after Corey.
B)$32,000 if Emma died 3 years after Corey.
C)$40,000 if Emma died 1 year after Corey.
D)$24,000 if Emma died 5 1/2 years after Corey.
E)None of the above amounts is correct.
Q3) One of the reasons the estate tax was enacted was to prevent the avoidance of the gift tax by the making of "deathbed gifts."
A)True
B)False
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Chapter 28: Income Taxation of Trusts and Estates
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132 Verified Questions
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Sample Questions
Q1) When DNI includes exempt interest income,the beneficiary includes less than the full amount of DNI in current-year gross income.
A)True
B)False
Q2) This year,the Nano Trust reported $50,000 entity accounting income and $40,000 distributable net income (DNI).Nano distributed $30,000 cash to Horatio,its sole income beneficiary.Nano is a complex trust.Nano's distribution deduction is:
A)$30,000.
B)$40,000.
C)$50,000.
D)$0.Because the distributions of a complex trust are discretionary,no deduction is allowed.
Q3) Corpus,principal,and assets of the trust are synonyms. A)True B)False
Q4) The Circle Trust has some exempt interest income for the year.How does this investment income affect Circle's deduction of its fiduciary fees? Charitable contributions?
Q5) The Form 1041 of a calendar-year trust is due on ____________________ 15.
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