Trusts Flashcards
To create a trust a _________________ gives money or property to the __________________, to be held in trust for the benefit of the __________________.
settlor, trustees, beneficiaries.
Which of the following statements are true?
i. The initial settlement (corpus) on the trust is income for tax purposes.
ii. Trustee’s are entitled to claim deductions for amounts incurred to earn income.
iii. The trust’s income is separated into two parts for tax purposes.
ii. Trustee’s are entitled to claim deductions for amounts incurred to earn income.
iii. The trust’s income is separated into two parts for tax purposes.
Trustee income:
is retained in the trust and taxed at the flat rate of 33%.
Beneficiary
is allocated to the beneficiaries and taxed at their marginal rates.
A trust files which type of income tax return?
IR6.
Beneficiary income is income derived by the trustee in an income year to the extent that it:
vests absolutely in interest of a beneficiary in the income year or is paid to a beneficiary within certain timeframes.
Trustee income is income derived by the trustee in an income year to the extent that it
is not beneficiary income
Beneficiary income derived by a minor (child):
is taxed at the trustee rate of 33% when the income is > $1,000.
Any beneficiary income is:
is included in the beneficiary’s IR3 and the beneficiary may claim a tax credit for tax
paid by the trustee as agent for the beneficiary.
Which of the following statements about trust losses is true?
A. Trust losses cannot be allocated to beneficiaries.
B. Trust losses can sometimes be allocated to beneficiaries.
C. Trust losses can always be allocated to beneficiaries.
D. Trust losses can always be allocated to the settlor.
E. Trust losses can sometimes be allocated to the settlor.
Trust losses cannot be allocated to beneficiaries.
