Comp SM_Ch28 - CHAPTER 28 INCOME TAXATION OF TRUSTS AND...

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CHAPTER 28 INCOME TAXATION OF TRUSTS AND ESTATES SOLUTIONS TO PROBLEM MATERIALS Status: Q/P Question/ Present in Prior Problem Topic Edition Edition 1 Issue ID Unchanged 1 2 Parties to a fiduciary entity Unchanged 2 3 Trusts and income shifting Unchanged 3 4 Fiduciaries and the AMT Unchanged 4 5 Simple versus complex trust; personal exemptions Unchanged 5 6 Determining taxable income: five-step approach Unchanged 6 7 Distributions of appreciated property Unchanged 7 8 Disallowance of § 212 deductions Unchanged 8 9 Cost recovery deductions of a fiduciary Unchanged 9 10 Charitable contributions of a fiduciary Unchanged 10 11 Issue ID Unchanged 11 12 Grantor trust rules Unchanged 12 13 Fiduciary tax planning New 14 Fiduciary tax planning New 15 Fiduciary tax planning New 16 Fiduciary AMT computations Unchanged 13 17 Attributes of trusts and estates Unchanged 14 18 Charitable contributions Unchanged 15 19 Computing DNI, taxable income Unchanged 16 20 Computing DNI, taxable income Unchanged 17 21 Separate share rule Unchanged 18 22 Tier distributions Unchanged 19 23 Constitution of DNI Unchanged 20 24 Computing DNI, taxable income Unchanged 21 25 Income in respect of a decedent Unchanged 22 26 Termination year losses Unchanged 23 28-1
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28-2 2005 Comprehensive Volume/Solutions Manual Status: Question/ Present Problem Topic Edition 1 Trust’s deduction of investment adviser fees Unchanged 2 Fiduciaries and passive activities New 3 Internet activity Unchanged
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Income Taxation of Trusts and Estates 28-3 CHECK FIGURES 16. 18. 19.a. 19.b. 19.c. 19.d. 20.a. 20.b. 20.c. 20.d. 21.a. 21.b. $18,850. $0; $7,500; $15,000. $25,000. $66,000. $14,700. $22,000. $30,000. $81,000. ($300). $27,000. $25,000. $15,000. 22.a. 23. 24.a. 24.b. 24.c. 24.d. $50,000 first-tier, $70,000 total gross income. $12,000 (div.), $8,000 (taxable int.), $4,000 (exempt int.), $6,000 (passive); same for both. $100,000. $90,000. $37,900. Lydia $16,000; Kent $12,000 taxable part of distribution.
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28-4 2005 Comprehensive Volume/Solutions Manual DISCUSSION QUESTIONS 1. Taxpayers create trusts for a variety of reasons. Some trusts are established primarily for tax purposes, while others are designed to accomplish a specific financial goal or to provide for the orderly management of assets in case of an emergency. The most commonly encountered reasons for creating a fiduciary entity include the following. To hold life insurance policies on the decedent, as part of an estate plan to remove such policies from the gross estate. To manage assets, reduce probate costs, and assure the privacy of the distribution of assets near the end of the grantor’s life. To provide funds for an advanced education, accumulating income at a lower tax rate than that to which the grantor is subject. To hold or manage the assets of the grantor while he or she is in the military,
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This note was uploaded on 03/14/2010 for the course ACC 11101 taught by Professor Sun during the Spring '10 term at American Academy of Art.

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Comp SM_Ch28 - CHAPTER 28 INCOME TAXATION OF TRUSTS AND...

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