Introduction to Taxation Exam Review
Course Introduction
Introduction to Taxation provides students with a foundational understanding of the principles and practices of taxation within both individual and business contexts. The course covers the nature, objectives, and types of taxation systems, focusing on income tax laws, tax administration, and compliance requirements. Students will explore the economic, social, and legal implications of tax policies, learn how to compute basic tax liabilities, and examine the roles of government agencies in tax collection and enforcement. Through case studies and practical exercises, students will develop the analytical skills necessary to interpret tax regulations and understand their impact on financial decision-making for individuals and organizations.
Recommended Textbook
South Western Federal Taxation 2016 Comprehensive 39th Edition by William H. Hoffman
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Chapter 1: An Introduction to Taxation and Understanding the Tax Law
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Sample Questions
Q1) Without obtaining an extension,Pam files her income tax return 55 days after the due date.With her return,she pays an additional tax of $60,000.Disregarding any interest element,what is Pam's penalty for failure to pay and to file?
Answer: $6,000.Disregarding the interest element,Pam's total penalties are as follows: Failure to pay penalty (0.5% × $60,000 × 2 months)
$ 600 Plus:Failure to file penalty (5% × $60,000 × 2 months)
$6,000
Less failure to pay penalty for same period (600)
5,400
Total penalties
$6,000
Q2) Tax credits for home improvements that conserve energy.
Answer: a
Q3) Tax on transfers at death (inheritance type)
Answer: j
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Chapter 2: Working With the Tax Law
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Q1) A taxpayer must pay any tax deficiency assessed by the IRS and sue for a refund to bring suit in the U.S.District Court.
A)True
B)False
Answer: True
Q2) How can Congressional Committee Reports be used by a tax researcher?
Answer: Congressional Committee Reports often explain the provisions of proposed legislation and are a valuable source of ascertaining the intent of Congress.The intent of Congress is the key to interpreting new legislation by taxpayers,especially before Regulations are published.
Q3) Revenue Procedures deal with the internal management practices and procedures of the IRS.
A)True
B)False
Answer: True
Q4) Tax planning usually involves a completed transaction.
A)True
B)False Answer: False
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Chapter 3: Computing the Tax
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Q1) Under the Federal income tax formula for individuals,the determination of adjusted gross income (AGI) precedes that of taxable income (TI).
A)True
B)False
Answer: True
Q2) When can a taxpayer not use Form 1040EZ? Form 1040A?
Answer: Form 1040EZ cannot be used when the taxpayer claims any dependents;is age 65 or older (or blind);or,has taxable income of $100,000 or more.Form 1040A cannot be used if the taxpayer itemizes deductions from AGI.
Q3) A stepdaughter who does not live with taxpayer.
Answer: b
Q4) 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
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Page 5
Chapter 4: Gross Income: Concepts and Inclusions
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Q1) In the case of a below-market gift loan for which there is no exception to the imputed interest rules,the lender is deemed to have received interest income even though no interest is charged and collected.
A)True
B)False
Q2) Betty purchased an annuity for $24,000 in 2015.Under the contract,Betty will receive $300 each month for the rest of her life.According to the actuarial estimates,Betty will live to receive 96 payments and will receive a 3% return on her original investment.
A)If Betty collects $3,000 in 2015,her gross income is $630 (.03 × $21,000).
B)Betty has no gross income until she has collected $24,000.
C)If Betty lives to collect more than 96 payments,all of the amounts collected after the 96th payment must be included in taxable income.
D)If Betty lives to collect only 60 payments before her death,she will report a $6,000 loss from the annuity [$24,000 - (60 × $300) = $6,000] on her final return.
E)None of these.
Q3) How does the taxation of Social Security benefits differ from the taxation of an annuity purchased by the taxpayer?
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Chapter 5: Gross Income: Exclusions
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Q1) Tommy,a senior at State College,receives free room and board as full compensation for working as a resident advisor at the university dormitory.The regular housing contract is $2,000 a year in total,$1,200 for lodging and $800 for meals in the dormitory.Tommy had the option of receiving the meals or $800 in cash.Tommy accepted the meals.What must Tommy include in gross income from working as a resident advisor?
A)All items can be excluded from gross income as a scholarship.
B)The meals must be included in gross income.
C)The meals may be excluded because he did not receive cash.
D)The lodging must be included in gross income because it was compensation for services.
E)None of these.
Q2) Benny loaned $100,000 to his controlled corporation.When it became apparent the corporation would not be able to repay the loan in the near future,Benny canceled the debt.The corporation should treat the cancellation as a nontaxable contribution to capital.
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) If a vacation home is rented for less than 15 days during a year,the only expenses that can be deducted are mortgage interest,property taxes,and personal casualty losses.
A)True
B)False
Q2) What are the relevant factors to be considered in determining whether an activity is profit-seeking or a hobby?
Q3) Only under limited circumstances can a loss on the sale of a personal use asset be deducted.
A)True
B)False
Q4) For purposes of the § 267 loss disallowance provision,a taxpayer's aunt is a related party.
A)True
B)False
Q5) Under what circumstance can a bribe be deducted?
Q6) Legal expenses incurred in connection with rental property are deductions from AGI. A)True
B)False
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Chapter 7: Deductions and Losses: Certain Business
Expenses and Losses
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Q1) Discuss the treatment,including the carryback and carryforward periods,of casualty losses incurred with personal use property.
Q2) Susan has the following items for 2015: Loss on rental property caused by termites-$110,000.Insurance covered 80% of the loss. Loss on personal use automobile-$10,000.The insurance policy does not cover the first $3,000 of loss.Susan decided not to file a claim for the loss. Loss on a painting stolen from Susan's house.Susan purchased the painting three years ago as an investment.She paid $40,000 for the painting and it was worth $35,000 at the time of the theft.The painting was insured for the fair market value. Salary-$40,000. Determine Susan's AGI and total amount of itemized deductions for 2015.
Q3) The domestic production activities deduction (DPAD) for a sole proprietor is calculated by multiplying a percentage rate (currently 9%) times adjusted gross income.
A)True
B)False
Q4) If a taxpayer sells their § 1244 stock at a loss,all of the loss will be ordinary loss. A)True B)False
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Chapter
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Q1) Joe purchased a new five-year class asset on June 1,2015.The asset is listed property (not an automobile).It was used 55% for business and 45% for the production of income.The asset cost $1,000,000.Joe made the § 179 election.Joe's taxable income would not create a limitation for purposes of the § 179 deduction.Joe does not take additional first-year depreciation (if available).Determine Joe's total cost recovery (including the § 179 deduction) for the year.
Q2) Any § 179 expense amount that is carried forward is subject to the business income limitation in the carryforward year.
A)True
B)False
Q3) Orange Corporation begins business on April 2,2015.The corporation reports startup expenditures of $64,000 all incurred last year.Determine the total amount that Orange can elect to deduct in 2015.
A)$0
B)$3,200
C)$4,267
D)$7,950
E)None of the above
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) Robert entertains several of his key clients on January 1 of the current year.Expenses paid by Robert are as follows: Cab fare $ 60 Cover charge at supper club 200 Dinner at club 800 Tips to waiter 160 Presuming proper substantiation,Robert's deduction is:
A)$610.
B)$640.
C)$740.
D)$1,220.
E)None of these.
Q2) Nicole just retired as a partner in a Philadelphia law firm.She moved to San Francisco where she took a job as an adjunct professor at a local law school.Can Nicole deduct her moving expenses? Explain
Q3) Which,if any,of the following factors is not a characteristic of independent contractor status?
A)Work-related expenses are reported on Form 2106.
B)Receipt of a Form 1099 reporting payments received.
C)Workplace fringe benefits are not available.
D)Services are performed for more than one party.
E)None of these.
Q4) Nondeductible moving expense
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Chapter 10: Deductions and Losses: Certain Itemized
Deductions
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Q1) A physician recommends a private school for Ellen's dependent child.Because of the physician's recommendation,the cost of the private school will qualify as a medical expense deduction (subject to percentage limitations).
A)True
B)False
Q2) For all of the current year,Randy (a calendar year taxpayer) allowed the Salvation Army to use a building he owns rent-free.The building normally rents for $24,000 a year.Randy will be allowed a charitable contribution deduction this year of $24,000.
A)True
B)False
Q3) Samuel,a 36 year old individual who has been physically handicapped for a year,paid $15,000 for the installation of wheelchair ramps,support bars,railings,and widening doorways in his personal residence.These improvements increased the value of his personal residence by $4,000.How much of Samuel's expenditures qualify as a medical expense deduction (subject to the 10% floor)? Explain.
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Chapter 11: Investor Losses
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Q1) In the current year,Kelly had a $35,000 loss from a real estate rental activity in which she is a 10% owner.If she is an active participant and if her modified AGI is $100,000,she can deduct $25,000 of the loss.
A)True
B)False
Q2) Significant participation activity.
Q3) Sandra acquired a passive activity three years ago.Until last year,the activity was profitable and her at-risk amount was $300,000.Last year,the activity produced a loss of $100,000,and in the current year,the loss is $50,000.Assuming Sandra has received no passive income in the current or prior years,her suspended passive loss from the activity is:
A)$90,000 from last year and $50,000 from the current year.
B)$100,000 from last year and $50,000 from the current year.
C)$0 from last year and $0 from the current year.
D)$50,000 from the current year.
E)None of the above.
Q4) Describe the general rules that limit the deduction of investment interest expense.
Q5) At-risk amount.
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Chapter 12: Tax Credits and Payments
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Q1) In May 2011,Cindy incurred qualifying rehabilitation expenditures of $500,000 on a certified historic structure and properly claimed the tax credit for rehabilitation expenditures.In March 2015,she sold the building at a loss.Calculate the rehabilitation expenditures credit recapture that she must report in 2015.
Q2) A taxpayer who qualifies for the low-income housing credit claims the credit over a 20-year period.
A)True
B)False
Q3) 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
Q4) Discuss the treatment of unused general business credits.
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Chapter 13: Property Transactions: Determination of Gain or
Loss, basis Considerations, and Nontaxabl
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Q1) The holding period of property acquired by gift may begin on:
A)The date the property was acquired by the donor only.
B)The date of gift only.
C)Either the date the property was acquired by the donor or the date of gift.
D)The last day of the tax year in which the property was originally acquired by the donor.
E)None of the above.
Q2) Sam and Cheryl,husband and wife,own property jointly.The property has an adjusted basis of $400,000 and a fair market value of $500,000.
a.Discuss the rules for the calculation of the adjusted basis of the property to Sam if he inherits his wife's share of the property and Sam and Cheryl live in a community property state.
b.If they live in a common law state?
Q3) Milton purchases land and a factory building for his business for $300,000 with $100,000 being allocated to the land.During the first year,Milton deducts cost recovery of $4,922.Milton's adjusted basis for the building at the end of the first year is $195,078 ($200,000 - $4,922).
A)True
B)False
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Chapter 14: Property Transactions: Capital Gains and
Losses, section 1231 and Recapture Provisions
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Q1) Verway,Inc. ,has a 2015 net § 1231 gain of $55,000 and had a $62,000 net § 1231 loss in 2014.For 2015,Verway's net § 1231 gain is treated as:
A)$55,000 ordinary loss.
B)$55,000 ordinary gain.
C)$55,000 capital loss.
D)$55,000 capital gain.
E)None of the above.
Q2) The possible holding periods for capital assets include:
A)Short-term = held 14 months or less.
B)Long-term = greater than six months.
C)Long-term = greater than 12 months.
D)Short-term = greater than 12 months.
E)None of the above.
Q3) In early 2014,Wanda paid $33,000 for an option on a parcel of land she intended to hold as an investment.After a survey of the land (paid for by the grantor) determined that the parcel was much smaller than the grantor said it was,she let the option lapse when it expired in 2015 after 14 months.How should Wanda treat these events in 2014? 2015?
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Chapter 15: Alternative Minimum Tax
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Q1) If the regular income tax deduction for medical expenses is $0,under certain circumstances the AMT deduction for medical expenses can be greater than $0.
A)True
B)False
Q2) The deduction for charitable contributions in calculating the regular income tax can differ from that in calculating the AMT because the percentage limitations (20%,30%,and 50%) may be applied to a different base amount.
A)True
B)False
Q3) What is the relationship between taxable income and AMTI?
Q4) The AMT adjustment for mining exploration and development costs can be avoided if the taxpayer elects to write off the expenditures in the year incurred for regular income tax purposes,rather than writing off the expenditures over a 10-year period for regular income tax purposes.
A)True
B)False
Q5) Will all AMT adjustments reverse? That is,do they relate to timing differences?
Q6) For the ACE adjustment,discuss the relationship between ACE and unadjusted AMTI.
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Chapter 16: Accounting Periods and Methods
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Q1) The accrual method generally is required to report income for which of the following types of businesses:
A)From long-term construction contracts.
B)Earned by an incorporated public accounting firm with gross receipts in excess of $5 million.
C)Earned by a partnership that has a partner that is an S corporation.
D)A grocery store with average annual gross receipts of $800,000.
E)None of the above.
Q2) Ramon sold land in 2015 with a cost of $80,000 for $200,000.The sales agreement called for a $50,000 down payment and a $50,000 payment plus 8% interest to be received on the first day of each year for the next three years.What would be the consequences of the following (treat each part independently and assume Ramon uses the installment method whenever possible):
a.In 2015,Ramon gave one of the $50,000 installment obligations to a close relative.
b.In 2015,Ramon transferred the installment obligations ($50,000) to his 100% owned corporation.
c.Ramon collected the $50,000 plus $12,000 interest on January 1,2016,and died on January 2,2016.
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Chapter 17: Corporations: Introduction and Operating Rules
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Q1) Heron Corporation,a calendar year C corporation,had an excess charitable contribution for 2014 of $5,000.In 2015,Heron made a further charitable contribution of $20,000.Heron's 2015 deduction is limited to $15,000 (10% of taxable income).The 2015 contribution must be applied first against the $15,000 limitation.
A)True
B)False
Q2) Which of the following statements is incorrect regarding the dividends received deduction?
A)A corporation must hold stock for more than 90 days in order to qualify for a deduction with respect to dividends on such stock.
B)The taxable income limitation does not apply with respect to the 100% deduction available to members of an affiliated group.
C)If a stock purchase is financed 75% by debt,the deduction for dividends on such stock is reduced by 75%.
D)The taxable income limitation does not apply if the normal deduction (i.e. ,70% or 80% of dividends) results in a net operating loss for the corporation.
E)None of the above.
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Chapter 18: Corporations: Organization and Capital Structure
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Q1) Wade and Paul form Swan Corporation with the following investments.Wade transfers machinery (basis of $40,000 and fair market value of $100,000),while Paul transfers land (basis of $20,000 and fair market value of $90,000) and services rendered (worth $10,000) in organizing the corporation.Each is issued 25 shares in Swan Corporation.With respect to the transfers:
A)Wade has no recognized gain;Paul recognizes income/gain of $80,000.
B)Neither Wade nor Paul has recognized gain or income on the transfers.
C)Swan Corporation has a basis of $30,000 in the land transferred by Paul.
D)Paul has a basis of $30,000 in the 25 shares he acquires in Swan Corporation.
E)None of the above.
Q2) Allen transfers marketable securities with an adjusted basis of $120,000,fair market value of $300,000,for 85% of the stock of Heron Corporation.In addition,he receives cash of $40,000.Allen recognizes a capital gain of $40,000 on the transfer.
A)True
B)False
Q3) Similar to like-kind exchanges,the receipt of "boot" under § 351 can cause loss to be recognized.
A)True
B)False
Page 20
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Chapter 19: Corporations: Distributions Not in Complete Liquidation
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Q1) Dividends taxed as ordinary income are considered investment income for purposes of the investment interest expense limitation.
A)True
B)False
Q2) Silver Corporation,a calendar year taxpayer,has taxable income of $550,000.Among its transactions for the year are the following: Collection of proceeds from insurance policy on life of corporate officer (in excess of cash surrender value) $82,500 Realized gain (not recognized) on an involuntary conversion 11,000 Nondeductible fines and penalties 44,000 Disregarding any provision for Federal income taxes,Silver Corporation's current E & P is:
A)$500,500.
B)$588,500.
C)$599,500.
D)$687,500.
E)None of the above.
Q3) A shareholder's basis in property acquired in a stock redemption is the property's fair market value as of the date of redemption.
A)True
B)False
Page 21
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Chapter 20: Corporations: Distributions in Complete
Liquidation and an Overview of Reorganizations
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Q1) Explain why the antistuffing rules were enacted to limit the deductibility of losses realized by a corporation upon liquidation.
Q2) Compare the sale of a corporation's assets with a sale of its stock from the perspective of the seller.
Q3) Mars Corporation merges into Jupiter Corporation by exchanging all of its assets for 300,000 shares of Jupiter stock valued at $2 per share and $100,000 cash.Wanda,the sole shareholder of Mars,surrenders her Mars stock (basis $900,000) and receives all of the Jupiter stock transferred to Mars plus the $100,000.How does Wanda treat this transaction on her tax return?
A)Wanda recognizes a $100,000 gain.Her Jupiter stock basis is $900,000.
B)Wanda recognizes a loss of $100,000.Her Jupiter stock basis is $800,000.
C)Wanda recognizes a $100,000 gain.Her Jupiter stock basis is $700,000.
D)Wanda realizes a $200,000 loss of which $100,000 is recognized.Her Jupiter stock basis is $1 million.
E)None of the above.
Q4) What are the tax consequences of a § 332 liquidation to the parent corporation,subsidiary corporation,and minority shareholder?
Q5) Discuss the role of letter rulings in corporate reorganizations.
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Chapter 21: Partnerships
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Q1) Business purpose
Q2) Landis received $90,000 cash and a capital asset (basis of $50,000,fair market value of $60,000) in a proportionate liquidating distribution.His basis in his partnership interest was $120,000 prior to the distribution.How much gain or loss does Landis recognize and what is his basis in the asset received?
A)$0 gain or loss;$30,000 basis.
B)$0 gain or loss;$50,000 basis.
C)$0 gain or loss;$60,000 basis.
D)$20,000 gain;$50,000 basis.
E)$30,000 gain;$60,000 basis.
Q3) Constructive liquidation scenario
Q4) The amount of a partnership's income and loss from operating activities is combined with separately stated income and expenses to determine the partnership's equivalent of "taxable income." This amount is reconciled to book income on the partnership's Schedule M-1 or Schedule M-3.
A)True
B)False
Q5) § 179 deduction
Q6) Profits interest
Page 23
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Chapter 22: S Corporations
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Q1) An S election made before becoming a corporation is valid only beginning with the first 12-month tax year.
A)True
B)False
Q2) There is no need formally to elect to treat ____________________ members as a single shareholder.
Q3) Which tax provision does not apply to an S corporation?
A)DPAD.
B)Section 1244 stock.
C)Penalty for failure to file.
D)10% charitable contribution limitation.
E)Estimated tax payments.
Q4) Tax-exempt income at the S corporation level flows through as taxable to the shareholder.
A)True B)False
Q5) S corporations are treated as partnerships under state property laws. A)True B)False
Q6) Non-separately computed loss ____________________ a S shareholder's stock basis.
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Chapter 23: Exempt Entities
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Q1) Membership lists
Q2) Tax on excess business holdings
Q3) Define a qualified corporate sponsorship payment.
Q4) Help,Inc. ,a tax-exempt organization,incurs lobbying expenses of $275,000 during the tax year.Help is eligible for and makes the § 501(h) lobbying expenditure election.During the year,Help spends $1,200,000 carrying out its exempt mission.
a.Will the lobbying expense result in Help losing its exempt status?
b.Calculate the amount of any tax that Help must pay associated with its lobbying expenses.
Q5) What are the common characteristics of organizations that receive exempt status?
Q6) § 501(c)(3) organization
Q7) § 501(c)(6) business league
Q8) Branded calendars
Q9) All exempt organizations which are subject to the unrelated business income tax must file Form 990-T (Exempt Organization Business Income Tax Return).
A)True
B)False
Q10) What tax forms are used to apply for exempt status?
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Chapter 24: Multistate Corporate Taxation
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Q1) ____________________ describe(s) the degree of business activity that must be present before a taxing jurisdiction has the right to impose a tax on an out-of-state entity's income.
Q2) Bert Corporation,a calendar-year taxpayer,owns property in States M and O.Both M and O require that the average value of assets be included in the property factor.M requires that the property be valued at its historical cost,and O requires that the property be included in the property factor at its net depreciated book value. Account Balances at Beginning of Year State M State O Totals Inventories $200,000 $300,000 $ 500,000 Building & machinery (cost) 700,000 300,000 1,000,000 Accumulated depreciation (150,000) (50,000) (200,000) Land 400,000 200,000 600,000 Totals $1,150,000 $750,000
$1,900,000 Account Balances at Year-End State M State O Totals Inventories $ 400,000 $100,000 $ 500,000 Building & machinery (cost) 800,000 500,000 1,300,000 Accumulated depreciation (300,000) (100,000) (400,000) Land 400,000 200,000 600,000 Totals
$1,300,000 $700,000 $2,000,000 Annual rent payments $ 50,000 $ 25,000 Bert's State M property factor is:
A)75.0%.
B)66.7%.
C)64.9%.
D)64.5%.
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Chapter 25: Taxation of International Transactions
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Q1) In working with the foreign tax credit,a U.S.corporation may be able to alleviate the problem of excess foreign taxes by:
A)Deducting the excess foreign taxes that do not qualify for the credit.
B)Repatriating more foreign income to the United States in the year there is an excess limitation.
C)Generating "same basket" foreign-source income that is subject to a tax rate higher than the U.S.tax rate.
D)Generating "same basket" foreign-source income that is subject to a tax rate lower than the U.S.tax rate.
Q2) Foreign taxpayers earning income inside the United States.
Q3) A non-U.S.citizen who holds a "green card."
Q4) The transfer of the assets of a U.S.corporation's foreign branch to a newly formed foreign corporation is always tax deferred under § 351.
A)True
B)False
Q5) Ownership threshold for U.S.shareholders to be deemed a controlled foreign corporation.
Q6) Bilateral agreement between two countries related to tax issues.
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Chapter 26: Tax Practice and Ethics
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Source URL: https://quizplus.com/quiz/66402
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Q1) With respect to tax misconduct,a ____________________ penalty usually involves only a fine,and a ____________________ penalty also can include jail time.
Q2) A negligence penalty is assessed when the taxpayer is found to have not made a reasonable attempt to comply with the tax law.
A)True
B)False
Q3) Latrelle prepares the tax return for Whitehall Corporation.Latrelle includes a $5,000 deduction on the return.This type of deduction previously has been disallowed by the Tax Court,although there is a 15% chance that the holding will be reversed on an appeal by Whitehall.The return does not make any special disclosure that the deduction is being claimed.Whitehall paid Latrelle a fee of $8,000 for preparing the Form 1120.Latrelle will be assessed a preparer penalty of $4,000 for taking an unreasonable position on the Whitehall return.
A)True
B)False
Q4) A(n) ___________________ must obtain a Preparer Tax Identification Number (PTIN).
Q5) Substantial understatement of tax liability.
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Chapter 27: Family Tax Planning
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Source URL: https://quizplus.com/quiz/66403
Sample Questions
Q1) A husband and wife make a gift of their jointly owned vacation home to their adult children.The gift-splitting election must be made.
A)True
B)False
Q2) Election to split gifts (§ 2513)
Q3) At the time of her death,Amber owns property worth $5,000,000.Other information regarding her affairs is as follows. Unpaid pledge to the building fund of her church $50,000 College graduation gift she had promised her grandson 20,000 Local property taxes owed (accrued prior to death) 100,000 Casualty loss to uninsured vacation home (fire occurred one month before death) 500,000 Mortgage owed on personal residence 800,000 All of these items (except the casualty loss) were paid by her estate,and none were deducted on Form 1041 (income tax return of the estate).What is Amber's taxable estate?
Q4) Decedent owned a policy on the life of his spouse with himself as the designated beneficiary.The spouse survives.
Q5) A marital deduction is not allowed if the surviving spouse is a nonresident alien.
A)True B)False
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Chapter 28: Income Taxation of Trusts and Estates
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Source URL: https://quizplus.com/quiz/66404
Sample Questions
Q1) Corpus,principal,and assets of the trust are synonyms.
A)True
B)False
Q2) Consider the term distributable net income as it is used with respect to the Federal income taxation of trusts and estates.How is this amount computed? Where is it used in computing the parties' taxable incomes?
Q3) Income beneficiary Molly wants to receive all of the municipal bond interest income of the Brenner Trust.A special allocation of this sort must be supported by a non-tax ____________________.
Q4) A trust that might be used to reduce probate costs,but not Federal estate and gift tax.
Q5) A trust whose income can be distributed to beneficiaries and in amounts at the trustee's discretion.
Q6) The Circle Trust reports some exempt interest income for the year.How does this investment income affect Circle's deduction of its fiduciary fees? Charitable contributions?
Q7) Remainder beneficiary Shelley receives a $50,000 net operating loss carryover when the Malone Trust terminates.Shelley deducts this amount ____________________ (for/from) AGI on her Form 1040.
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