OTAX Flashcards
During the current year, trust reports the following information:
Dividends $10,000
Interest from corporate bonds 12,000
Tax-exempt interest from state bonds 4,000
Capital gain (allocated to corpus) 2,000
Trustee fee (allocated to corpus) 6,000
What is the trust’s accounting income?
$26,000
Which of the following types of entities is entitled to the net operating loss deduction?
a. S corporations.
b. Partnerships.
c. Not-for-profit organizations.
d. Trusts and estates.
Trusts and estates.
Alan Curtis, a US citizen, died on March 1, 2013, leaving a gross estate with a fair market value of $5,600,000 at the date of death. Under the terms of Alan’s will, $4 million was bequeathed outright to his widow, free of all estate and inheritance taxes. The remainder of Alan’s estate was left to his mother. Alan made no taxable gifts during his lifetime. Disregarding extensions of time for filing, within how many months after the date of Alan’s death is the federal estate tax return due?
9
In filing his 2013 In 2013, Roger, who is single, gave an outright gift of $15,000 to friend, Matt, who needed the money to pay tuition at an accredited university. In filing his 2013 gift tax return, Roger was entitled to a maximum exclusion of
$14,000
Which of the following payments would require the donor to file gift tax return?
a. $50,000 to a hospital for parent’s medical expenses.
b. $40,000 to a university for a cousin’s room and board.
c. $80,000 to a physician for a friend’s surgery.
d. $30,000 to a university for spouse’s tuition.
$40,000 to a university for a cousin’s room and board.
Brown transfers property to a trust. A local bank was named trustee. Brown retained no powers over the trust. The trust instrument provides that current income and $6,000 of principal must be distributed annually to the beneficiary. What type of trust was created?
Complex
Mr. Chang deposited $50,000 in joint bank account that he created for himself and his friend’s son, Mohammed. There is gift to Mohammed when
Mohammed draws on the account for his own benefit.
During the current year, Mann, an unmarried US citizen, made a $5,000 cash gift to an only child and also paid $25,000 in tuition expenses directly to a grandchild’s university on the grandchild’s behalf. Mann made no other lifetime transfers. Assume that the gift tax annual exclusion is $14,000. For gift tax purposes, what was Mann’s taxable gift?
$0
Roberts, a cash-basis calendar-year taxpayer, died on October 31, 2012. In 2012, prior to his death, Roberts incurred $18,000 in medical expenses. The executor of the estate paid the medical expenses, which were a claim against the estate, on December 3, 2012. If the executor files the appropriate waiver, the medical expenses are deductible on
Roberts’ final income tax return.
Mackenzie is the grantor of a trust over which Mackenzie has retained a discretionary power to receive income. Kelly, Mackenzie’s child, receives all taxable income from the trust unless Mackenzie exercises the discretionary power. To whom is the income earned by the trust taxable?
To Mackenzie because he has retained a discretionary power.
George and Suzanne have been married for 40 years. Suzanne inherited $1,000,000 from her mother. Assume that the annual gift tax exclusion is $14,000. What amount of the can Suzanne give to George without incurring a gift tax liability?
$1,000,000
Jan, an unmarried individual, gave the following outright gifts in 2013:
Donee Amount Use by Donee
Jones $16,000 Down payment on house
Craig 15,000 College tuition
Kande 5,000 Vacation trip
Jan’s 2013 exclusions for gift tax purposes should total
$33,000
The federal estate tax may be reduced by credit for foreign
Foreign death taxes.
Raff died in 2012 leaving her entire estate to her only child. Raff’s will gave full discretion to the estate’s executor with regard to distributions of income. For 2012, the estate’s distributable net income (DNI) was $15,000, of which $9,000 was paid to the beneficiary. None of the income was tax-exempt. What amount can be claimed on the estate’s 2012 fiduciary income tax return for the distributions deduction?
$9,000
Michael and JeMeace (brother and sister) own unimproved land that they hold in joint tenancy with rights of survivorship. The land cost $40,000 of which Michael paid $30,000 and paid $10,000. JeMeace died during 2012 when the land was worth $280,000. What amount should be included in JeMeace’s general estate with respect to the land?
$ 70,000
