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2008 CCH Comp Topics Ch23

2008 CCH Comp Topics Ch23 - Chapter 23 Income Taxation of...

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Chapter 23 Income Taxation of Trusts and Estates ©2007 CCH. All Rights Reserved. 4025 W. Peterson Ave. Chicago, IL 60646-6085 1 800 248 3248 www.CCHGroup.com
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CCH Federal Taxation Chapter 23 Exhibits Chapter 23, Exhibit Contents A 1. Five Key Elements of Every Trust 2. Trust Life Cycle Illustrated 3. Definition of Terms 4. Computing Tax Liability—Fiduciary vs. Nonfiduciary 5. Gross Income—Income in Respect of Decedent 6. Income in Respect of Decedent—Tax Treatment 7. Gross Income—Property Distributions 8. Deductions—Depreciation and Depletion 9. Deductions—Capital Losses 10. Deductions—Miscellaneous Itemized Deductions 11. Deductions—Casualty Losses and Charitable Contributions 12. Personal Exemptions
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CCH Federal Taxation Chapter 23 Exhibits Chapter 23, Exhibit Contents B 13. Distribution Deduction—Simple Trusts 14. The Distribution Deduction—Step 1: Computing State Law Accounting Income 15. Assignments to Corpus and Income—Default Designations 16. The Distribution Deduction—Step 2: Computing Taxable Income Before Distribution Deduction 17. The Distribution Deduction—Step 3: Computing Distributable Net Income 18. The Distribution Deduction—Step 4: Computing the Distribution Deduction 19. Computing Taxable Income of Simple Trusts—Example 20. Filing Requirements for Estates and Trusts
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CCH Federal Taxation Five Key Elements of Every Trust 1. Grantor . The grantor is the person who transfers property to the trust. The grantor often referred to as trustor, settlor or donor. 2. Trust property . Property must be transferred to the trust. It can be transferred during life, after death through the grantor’s will, through a gift, or by the exercise of a power of appointment (“POA”). It can be cash, a life insurance policy, stock, or any other asset that serves the intent of the grantor. Chapter 23, Exhibit 1a
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CCH Federal Taxation 3. Trustee. The trustee is the person responsible for managing and administering a trust. The trustee may be the grantor, a trusted friend, a family member, a bank trust department, or any combination of these and other persons. The trustee generally will hold legal title to the assets in the trust but not beneficial title. (a) Legal title means the trust assets are owned in the name of the trustee, the trustee has specific duties and responsibilities for the trust property, or has certain powers concerning the disposition of the trust property. (b) Beneficial title to the trust property is held by the beneficiaries of the trust. Five Key Elements of Every Trust Chapter 23, Exhibit 1b
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CCH Federal Taxation 4. Beneficiary . It’s important to know that the persons who are beneficiaries can be determined; that is, the description should be clear and certain. If “my descendants” are the named beneficiaries, there must be a time for making the determination of who the descendants are. Otherwise, it would be impossible to know when to make distributions from the trust.
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