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Yaeger REG > Mod 39 Taxation Of Estates And Trusts > Flashcards

Mod 39 Taxation Of Estates And Trusts Flashcards

1
Q

Transfer tax is also known as…

A

Gift tax

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2
Q

Final estate tax return is due…

A

9 months after death of decedent

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3
Q

Future payments out of a trust are…2

A

1 Taxable

2 $14,000 exclusion does not apply

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4
Q

What form is filed for estate tax?

A

Form 706

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5
Q

Neumonic for items deducted from estate tax 7

A 
F
A
D
D
Medical 
Casualty
Charitable
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6
Q

Estate tax neumonic, what does FADD stand for?

A

Funeral
Administrative
Debts of
Decedent

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7
Q

When are medical expenses deductible from estate tax?

A

Final medical expenses are deducted

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8
Q

For estate tax purposes, if you want final medical expenses deducted on Form 706 (instead of itemized deductions on schedule A) if…

A

Medical expenses are paid in final year of decedent

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9
Q

Concurrently held property

A

Property held with other people

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10
Q

Under tax law, under tenancy in common and joint tenancy if a tenant dies, and they own 30% of $1 million property…

A

$300,000 goes to their estate

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11
Q

If estate is the beneficiary, life insurance proceeds are…

A

Gross asset of your estate

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12
Q

Gift taxes paid within 3 years of death go…

A

Into decedent’s estate

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13
Q

Unlimited exclusion for gifts given for tuition or medical must be made…

A

Directly to the provider

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14
Q

What is another name for applicable credit?

A

Transfer tax credit

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15
Q

When property of a decedent is held in joint tenancy with another, what amount goes in the estate?

A

% decedent paid X FMV

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16
Q

Foreign death taxes is…

A

A credit

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17
Q

Unpaid, is…2

A

1 Debt of decedent

2 valid deduction from decedent’s gross estate

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18
Q

Alternative valuation date can be elected only if it’s use decreases both…2

A

1 value of gross estate and

2 estate tax liability

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19
Q

A life insurance policy payable to the estate’s executor as the estate’s representative are…

A

Always includible in decedent’s gross estate

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20
Q

Generation skipping transfer is imposed in…

A

Addition to gift tax

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21
Q

Generation skipping transfer tax is imposed at the…

A

Highest tax rate under the transfer tax rate schedule

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22
Q

Form 1041 is the…

A

U.S. Fiduciary Return

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23
Q

Tax years of trusts and estates?

A

1 trust must adopt calendar year

2 estate may adopt fiscal year or calendar year

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24
Q

3 situations when a trust must file a return

A

1 gross income of $600 or more

2 any taxable income

3 nonresident alien is beneficiary

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25
Q

AMT applies to…

A

Trusts

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26
Q

Estates and trusts must make estimated payments like…

A

Individuals

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27
Q

When do estates not need to make estimated payments?

A

Within 2 years of decedent’s death

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28
Q

Simple trust 3 characteristics

A

1 trustee distributes app income to beneficiary each year

2 can’t make charitable contributions

3 makes no distribution of trust principal

29
Q

Trust corpus

A

Trust principal

30
Q

Complex trust, define

Examples

A

Any trust other than simple trust

Ex. Trust can make charitable contributions and distribute corpus

31
Q

On Form 706, administrative and funeral expenses can be…

A

Deducted from estate if reasonable

32
Q

Charitable contributions of a trust can only be deducted if…

A

They come out of income of trust or estate

33
Q

Any unused capital loss carryover…

A

Can’t be deducted on final 1040

34
Q

DNI

A

Distributable net income

35
Q

Distributable net income, define

A

Whatever is taxed to beneficiary of trust

36
Q

Decedent income is reported on…

A

Both fiduciary income tax return and estate tax return

37
Q

Ordinary and necessary administration expenses paid by the fiduciary of an estate are deductible on the fiduciary income tax return only if…

A

Estate tax deduction is waived for these expenses

38
Q

Form 1023 (tax exempt organizations) must be filed…

A

15 months after end of month organization is formed

39
Q

Tax exempt organizations that don’t need to file

A

Organizations other than a foundation, with gross receipts of less
than $5,000

40
Q

What is the filing date for most tax exempt organizations?

A

May 15th (15th day of 5th month)

41
Q

Related income of tax exempt organizations 4

A

1 activities performed by volunteers
2 income from investments if it is not debt financed
3 rental income
4 sale of merchandise received as gifts

42
Q

What does UBI stand for?

A

Unrelated business income

43
Q

What amount of unrelated business income goes untaxed?

A

First $1,000

44
Q

Exempt organizations can incorporate and…

A

Issue capital stock

45
Q

To qualify as an exempt organization other than a church or an employee’s qualified pension or profit sharing trust an applicant must…

A

File a written application with the IRS

46
Q

A tax exempt religious organization cannot conduct retreats for business organizations because it’s…

A

Not a religious business activity

47
Q

Organization will lose exempt tax status after…

A

3 years of producing unrelated services

48
Q

Nexus

A

Nonresident required to pay tax where they do not have a presence

49
Q

U.S. Corporations are not taxed on money earned by a foreign subsidiary until…

A

Transferred to parent in form of dividends

50
Q

Foreign credit can be deducted as…

A

Credit or deduction on the tax return

51
Q

Foreign credit carry back and carry forward.

A

carryback = 1 year

Carry forward = 10 years

52
Q

Maximum foreign credit calculation for current year

A

Max foreign credit =

(Foreign taxable income/worldwide income) X US taxes paid

53
Q

What does UDITPA stand for?

A

Uniform Division of Income for Tax Purposes Act

54
Q

Uniform Division of Income for Tax Purposes Act (UDITPA) provides rules for…

A

Allocating income among states and foreign countries

55
Q

Under UDITPA, Nonbusiness income is allocated as follows:

Interest and dividends are allocated to…

A

State of taxpayer’s commercial domicile

56
Q

Under UDITPA, Nonbusiness income is allocated as follows:

Net rents and royalties from real property are allocated to…

A

State where property is located

57
Q

Under UDITPA, Nonbusiness income is allocated as follows:

Capital gains and losses from sales of real property are allocated to…

A

State where property is located

58
Q

Under UDITPA, Nonbusiness income is allocated as follows:

Capital gains and losses from the sale of intangible personal property are allocated to…

A

State of taxpayer’s commercial domicile

59
Q

Under UDITPA, Nonbusiness income is allocated as follows:

Net rents and royalties from tangible property are allocated to…

A

State to extent that property is used in that state

60
Q

Under UDITPA, Nonbusiness income is allocated as follows:

Alternatively, all rents and royalties from tangible personal property will be allocated to the state of the taxpayer’s commercial domicile if the taxpayer is…2

A

1 not organized in or

2 taxable in state which property is utilized

61
Q

Under UDITPA, Nonbusiness income is allocated as follows:

Capital gains and losses from sales of tangible personal property are allocated to…

A

State property was situated during time of sale

62
Q

Under UDITPA, Nonbusiness income is allocated as follows:

Alternatively, gains and losses will be allocated to state of taxpayer’s commercial domicile if the taxpayer is…

A

Not taxable in state in which property was situated

63
Q

Under UDITPA, Nonbusiness income is allocated as follows:

Patent and copyright royalties are allocated to state to extent that patent and copyright is…

A

Utilized by payer in that state

64
Q

Under UDITPA, Nonbusiness income is allocated as follows:

Alternatively, Royalties will be allocated to state of taxpayer’s commercial domicile if taxpayer is…

A

Not taxable in state in which patent or copyright was utilized

65
Q

U.S. Taxation of foreign persons

Nonresident foreign persons are subject to 2 categories of income

A

1 income connected with US trade or business

2 passive, fixed annual income

66
Q

A nonresident alien who performs personal services within the U.S. is considered to be…

A

Engaged in U.S. trade or business

67
Q

Performance of personal services will not constitute US trade or business income if nonresident alien is…3

A

1 present less than 90 days during year

2 less than $3,000 received as compensation

3 works in foreign office of U.S. person

68
Q

Federal tax legislation process 5

A 
1 House of Representatives 
2 senate finance committee
3 must be passed on floor of house and senate
4 uniform bill goes to president
5 tax legislation amends IRC

Yaeger REG (77 decks)

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