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Regulation > Other Tax Topics > Flashcards

Other Tax Topics Flashcards

1
Q

Subject: Other Tax Topics

Describe the characteristics of a simple trust

A

Subject: Other Tax Topics
Simple Trust
1. Required to distribute all of its income to beneficiaries each year.
2. Cannot make charitable contributions.
3. Makes no distribution of trust corpus (principal) during the year.
4. Simple Trust is a grantor trust if it retains certain powers.
5. Simple Trust is a revocable trust if it retains the right to revoke.

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2
Q

Subject: Other Tax Topics

Describe the characteristics of a complex trust

A 
Subject:  Other Tax Topics
Complex Trust
1.  Trustee has discretion whether to distribute or accumulate its income
2.  May make charitable contributions
3.  May distribute trust principal
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3
Q

Subject: Other Tax Topics

What is the exclusion for gifts made to a done during calendar year 2014?

A

Subject: Other Tax Topics
The first $14,000 of gifts made to a done during calendar year 2014 (except for gifts of a future interests) is excluded in determining the amount of the donor’s taxable gifts for the year.

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4
Q

Subject: Other Tax Topics

True or False- The unified transfer tax rate schedule applies on a cumulative basis to both life and death transfers.

A

Subject: Other Tax Topics
True
The unified transfer tax rate schedule applies on a CUMULATIVE basis to both life and death transfers.

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5
Q

Subject: Other Tax Topics

What are the unlimited exclusions available under gift tax law in which a gift tax return does not need to be filed.

A

Subject: Other Tax Topics
Unlimited exclusions available under gift tax law in which a gift tax return does not need to be filed.
1. Medical expenses directly paid to a qualified medical organization on behalf on a donee.
2. College Tuition directly paid to a qualified educational institution on behalf on a donee.

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6
Q

Subject: Other Tax Topics

What is the due date for a gift tax return (Form 709)?

A

Subject: Other Tax Topics

Due date for a gift tax return (Form 709) is April 15th of the following year.

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7
Q

Subject: Other Tax Topics

What is the due date for a gift tax return (Form 709) if the donor subsequently dies?

A

Subject: Other Tax Topics
If the donor dies, the gift tax return is due no later than the date for filing the federal estate tax return (generally NINE months after date of death.

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8
Q

Subject: Other Tax Topics
True or False- An unlimited marital deduction is allowed for gift tax purposes for gifts to a donee, who at the time of the gift is the donor’s spouse.

A

Subject: Other Tax Topics
True
An unlimited marital deduction is allowed for gift tax purposes for gifts to a donee, who at the time of the gift is the donor’s spouse.

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9
Q

Subject: Other Tax Topics
True or False- An executor may elect to treat medical expenses paid by the decedent’s estate for the decedent’s medical care as paid by the decedent at the time the medical services were by provided by attaching a waiver.

A

Subject: Other Tax Topics
True
An executor may elect to treat medical expenses paid by the DECEDENT’S ESTATE for the decedent’s medical care as paid by the DECEDENT at the time the medical services were by provided by attaching a WAIVER.

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10
Q

Subject: Other Tax Topics

Define Unrelated Business Income

A

Subject: Other Tax Topics
Unrelated Business Income is income from an exempt organization from a business that is regularly carried on, and is unrelated to the organization’s exempt purpose.

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11
Q

Subject: Other Tax Topics

Unrelated Business Income is subject to tax to the extent of the excess of what amount?

A

Subject: Other Tax Topics

$1,000

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12
Q

Subject: Other Tax Topics

The maximum estate credit for 2014 is what amount?

A

Subject: Other Tax Topics
The maximum estate credit for 2014 is $5,340,000 and effectively permits $5,340,000 of taxable estate to be free from tax.

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13
Q

Subject: Other Tax Topics

In an estate, what is the general rule for joint tenancies?

A

Subject: Other Tax Topics
Under a general rule for joint tenancies, 100% of the value of jointly held property is included in a deceased tenant’s gross estate except to the extent that the surviving tenants can prove that they contributed to the cost of the property.

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14
Q

Subject: Other Tax Topics

In an estate, what is the exception for joint tenancies?

A

Subject: Other Tax Topics
In joint tenancies, the gross estate for the first spouse to die automatically includes 50% of the value of the jointly held property, regardless of which spouse furnished the original consideration for the purchase of the property.

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15
Q

Subject: Other Tax Topics

When can the gross estate of a decedent include the proceeds of life insurance on the decedent’s life?

A

Subject: Other Tax Topics
The gross estate of a decedent can include the proceeds of life insurance on the decedent’s life if
1. The insurance proceeds are payable to the estate.
2. The proceeds are payable to another for the benefit of the estate, or
3. The decedent possessed an incident of ownership in the policy.

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16
Q

Subject: Other Tax Topics

When is it required to file a federal estate tax return (Form 706)?

A

Subject: Other Tax Topics

A federal estate tax return (Form 706) must be filed if the decedent’s gross estate exceeds $5,340,000

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17
Q

Subject: Other Tax Topics

When can an executor of an estate elect to use the alternate valuation date?

A

Subject: Other Tax Topics
An executor of an estate can elect to use the alternate valuation date only if its use DECREASES both the value of the gross estate and the amount of estate tax liability.

18
Q

Subject: Other Tax Topics

When is the federal estate tax return (Form 706) due?

A

Subject: Other Tax Topics

The federal estate tax return (Form 706) is due NINE months after the decedent’s death.

19
Q

Subject: Other Tax Topics

Describe the generation- skipping transfer tax.

A

Subject: Other Tax Topics
The generation- skipping transfer tax is imposed as a separate tax in addition to the federal gift and estate taxes, and is designed to prevent an individual from escaping an entire generation of gift and estate taxes by transferring property to a person that is two or more generations BELOW that of the transferor.

20
Q

Subject: Other Tax Topics

When is the Fiduciary Income Tax Return (Form 1041) due?

A

Subject: Other Tax Topics

Form 1041 is due on the 15th day of the fourth month following the end of the tax year.

21
Q

Subject: Other Tax Topics
True or False- The maximum amount that is taxable to the beneficiary is limited to the estate’s Distributable Net Income (DNI).

A

Subject: Other Tax Topics
True
The maximum amount that is taxable to the beneficiary is limited to the estate’s Distributable Net Income (DNI).

22
Q

Subject: Other Tax Topics

True or False- Trusts and Estates are not required to make quarterly estimated tax payments.

A

Subject: Other Tax Topics
False
Trusts and Estates must make quarterly estimated tax payments, except that an estate is exempt from making estimated tax payments for taxable years ending within TWO years of the decedent’s death.

23
Q

Subject: Other Tax Topics

True or False- No standard deduction is available for a trust or an estate on the fiduciary income tax return.

A

Subject: Other Tax Topics
True
No standard deduction is available for a trust or an estate on the fiduciary income tax return.

24
Q

Subject: Other Tax Topics

Personal exemptions of what amounts are allowed for estates and trusts?

A 
Subject:  Other Tax Topics
The personal exemption is 
1.  $600 for an estate
2.  $300 for a trust required to distribute all income currently.
3.  $100 for all other trusts
25
Q

Subject: Other Tax Topics
True or False- Trusts are generally required to use the calendar year for tax purposes. However, an estate may use a calendar or a fiscal year as its taxable year.

A

Subject: Other Tax Topics
True
Trusts are generally required to use the calendar year for tax purposes. However, an estate may use a calendar or a fiscal year as its taxable year.

26
Q

Subject: Other Tax Topics
True or False- Ordinary and necessary administrative expenses paid by the fiduciary of the state can be deducted on either the estate’s fiduciary income tax return or on the estate’s federal estate tax return.

A

Subject: Other Tax Topics
True
Ordinary and necessary administrative expenses paid by the fiduciary of the state can be deducted on either the estate’s fiduciary income tax return or on the estate’s federal estate tax return.

27
Q

Subject: Other Tax Topics

A fiduciary income tax return (Form 1041) must be filed if the estate’s gross income is at least what amount?

A

Subject: Other Tax Topics

A fiduciary income tax return (Form 1041) must be filed if the estate’s gross income is at least $600

28
Q

Subject: Other Tax Topics

How is an estate’s DNI generally calculated?

A

Subject: Other Tax Topics
An estate’s DNI generally is its taxable income before the income distribution deduction, increased by its personal exemption, any net capital loss deduction, and tax-exempt income (reduced by related expenses), and decreased by any net capital gain allocable to corpus.

29
Q

Subject: Other Tax Topics

Form 990-N requirements

A

Subject: Other Tax Topics

Small exempt organizations whose gross receipts are $50,000 or less. Not required for churches

30
Q

Subject: Other Tax Topics

Form 990-PF requirements

A

Subject: Other Tax Topics

Private foundation

31
Q

Subject: Other Tax Topics

Form 990-T Exempt Organization Business Income Tax Return requirements

A

Subject: Other Tax Topics

An exempt organization having gross income of $1,000 or more from an UNRELATED BUSINESS.

32
Q

Subject: Other Tax Topics
True or False- A corporation with foreign operations may take either a deduction or a tax credit for the foreign income taxes paid which mitigated the double taxation of a company’s foreign-source earnings.

A

Subject: Other Tax Topics
True
A corporation with foreign operations may take either a deduction or a tax credit for the foreign income taxes paid which mitigated the double taxation of a company’s foreign-source earnings.

33
Q

Subject: Other Tax Topics

How are unused foreign tax credits carried?

A

Subject: Other Tax Topics
Unused foreign tax credits can be carried back ONE year and forward TEN years and used to the extent that the taxpayer is below the limitation in those years.

34
Q

Subject: Other Tax Topics

How is the organizational test satisfied for tax-exempt entities?

A

Subject: Other Tax Topics
To satisfy the organizational test, the articles of organization
1. Must limit the organization’s purposes to one or more exempt purposes described in Sec. (501) c3 and
2. Must not expressly empower the organization to engage in activities that are not in furtherance of one or more exempt purposes ,except as an INSUBSTANTIAL part of its activities.

35
Q

Subject: Other Tax Topics
True or False- When calculating the foreign tax credit limit, one limitation must be computed for foreign passive category income (interest, dividends, royalties, rents, annuities), with a separate limitation computed for foreign general category income.

A

Subject: Other Tax Topics
True
When calculating the foreign tax credit limit, one limitation must be computed for foreign passive category income (interest, dividends, royalties, rents, annuities), with a separate limitation computed for foreign general category income.

36
Q

Subject: Other Tax Topics

When is a gift considered “completed” for gift tax purposes?

A

Subject: Other Tax Topics

A gift considered “completed” for gift tax purposes when the trust creator has relinquished dominion and control.

37
Q

Subject: Other Tax Topics

True or False- Generally, gifts made before death are not includible in the decedent’s gross estate.

A

Subject: Other Tax Topics
True
Generally, gifts made before death are not includible in the decedent’s gross estate.

38
Q

Subject: Other Tax Topics
True or False- In a decedent’s gross estate, there is no deduction for bequests to beneficiaries other that the decedent’s surviving spouse.

A

Subject: Other Tax Topics
True
In a decedent’s gross estate, there is no deduction for bequests to beneficiaries other that the decedent’s surviving spouse.

39
Q

Subject: Other Tax Topics

True or False- Funeral expenses are deductible only on the estate tax return.

A

Subject: Other Tax Topics
True
Funeral expenses are deductible only on the estate tax return.

40
Q

Subject: Other Tax Topics

True or False- A gift of a future interest is eligible for an annual exclusion.

A

Subject: Other Tax Topics
False
A gift of a future interest is NOT ELIGIBLE for an annual exclusion.

41
Q

Subject: Other Tax Topics

True or False- Gross income does not include the value of property acquired by gift, bequest, devise, or inheritance.

A

Subject: Other Tax Topics
True
Gross income does not include the value of property acquired by gift, bequest, devise, or inheritance.
However, a gift tax may be required depending on the amount and the purpose of the gift.

42
Q

Subject: Other Tax Topics

True or False- trusts and estates may have an NOL that can be carried back and carried forward and used as a deduction

A

Subject: Other Tax Topics
True
Trusts and estates may have an NOL that can be carried back and carried forward and used as a deduction

Regulation (14 decks)

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