Chapter 12 Exam Review

Question 1

The due date of an estate tax return is

Answer 1

9 months after the date of death, however a 6 month extension may be granted.

Question 2

Contributions given to a political party are

Answer 2

not subject to gift tax

Question 3

Total amounts of gifts are reduced by

Answer 3

$14,000 exclusion per person

Question 4

A Complex Trust

Answer 4

1. Can accumulate income
2. Provide for charitable contributions
3. Distribute amounts other than income

Question 5

(GSTT) Generation Skipping Transfer Tax

Answer 5

Proceeds given to a skip person. As each person is allowed a $5.34 million exemption he may allocate to GSTT

Question 6

Decedents Final Return

Answer 6

1. May deduct for NOL and capital losses
2. There are no carry-forwards of unused losses or deductions
3. Capital loss deductions is limited to $3,000 in any year

Question 7

Decedent used the cash method of accounting

Answer 7

Only items actually received or constructively received before the date of death are included in the final return

Question 8

Payment that require a gift tax return if the transfer exceeds the available gift tax exclusion is

Answer 8

Form 709 payments for college books, supplies, and dormitory fees on behalf of an individual unrelated to the doner

Question 9

Simple Trust

Answer 9

requires current distribution of all its income, requires no distribution of (Res) Principal and provided for no charitable contributions by the trust

Question 10

Income attributable to the portion of a trust principle treated as owned by the grantor is

Answer 10

taxed to the grantor

Question 11

Liquidating dividends are

Answer 11

allocated to principal when received

Question 12

In default of a trust instrument designation

Answer 12

depreciation is charged to income

Question 13

A personal exemption is allowable for a trust

Answer 13

1. $600 for an estate
2. $300 for a simple trust
3. $100 for a complex trust

Question 14

(DNI) Distributable Net Income is

Answer 14

current net accounting income of the fiduciary reduced by any amounts allocated to principlal

Question 15

The executor is required to file Form 706 US Estate Tax Return if

Answer 15

the gross estate at the decedents death exceeds $5.34 million

Question 16

Which is true regarding estate income tax returns files on Form 1041

Answer 16

Form 1041 has its own tax rate schedule that reaches the 39.6% tax bracket for taxable incomes exceeding $12,150

Question 17

Required distribution fro a Simple Trust

Answer 17

1. Interest Income
2. Dividends
3. Tax-exempt interest

Question 18

Estates alternate valuation date is

Answer 18

6 months after the date of death

Question 19

A grantor trust is

Answer 19

not a separate taxable entity for income tax purposes

Question 20

An estate or trust is required to file Form 1041 when gross income is at least

Answer 20

greater than or equal to $600

Question 21

The beneficiary’s taxable amount is limited to the beneficiary’s share if

Answer 21

DNI distributable net income not the entire distribution

Question 22

Gift tax liability must be reported for

Answer 22

the calendar year