Chapter 18 - Decedent, Estate, and Trust Income Tax Returns

Question 1

What is a Simple Trust

Answer 1

1) formed under an instrument:
a) Requires current distribution of all its income
b) Requires no distribution of the Res ( or principal )
c) Provides for no charitable contributions by the trust

Question 2

A Complex Trust

Answer 2

any trust other than simple trust:
a) Accumulate income
b) Provide for Charitable contributions
c) Distribute amounts other than income

Question 3

A Grantor Trust

Answer 3

any trust to the extent the grantor is the effective beneficiary. Income attributable to a trust principal that is treated as owned by the grantor is taxed to the grantor.

Question 4

Other Grantor Trust criteria

Answer 4

1) A trust is considered Grantor Trust when it retains a greater than 5% reversionary interest.

2) income is distributed to spouse from the owner of a Grantor Trust.

3) Grantor Trust’s income is taxable and benefits the grantor.

4) No control and dominion of the trust hasn’t occured, the trust is not considered an seperate entity.

5) ALL REVOCABLE TRUSTS are GRANTOR TRUSTS.

6) Classifying a Grantor Trust is year to year basis.

7) An Estate with GI or TI greater than or equal to 600 is REQUIRED TO FILE. (4/15). ( 1041 form )

Question 5

What is taxable for a trust?

Answer 5

Only TI not items treated as fiduciary res.

Question 6

What is deductible for a trust?

Answer 6

1) Trustee or admin fees
2) tax return preparation fees
3) Depreciation
4) Fiduciary NOLs
5) CL
6) Charitable Contributions ( not subject to AGI )
7) Personal Exemption deduction