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Unformatted text preview: 20-1Chapter 20 Check figures (2014) updated: October 22, 2013 21. AttributeSimple TrustComplex TrustTrust could incur its own tax liability for the year Yes, if capital gains are allocable to corpus (the general rule). Yes Trust generally distributes all of DNI Yes, simple trust is required to distribute all accounting income (by definition). Depends on the terms in the trust agreement. Trust can deduct its charitable contributions in the year of, or the year after, payment No, simple trusts cannot make contributions to charitable organizations (by definition). Yes Trust could claim a foreign tax credit No, credit is allocated to beneficiaries on a pro-rata basis (based on DNI). Yes Maximum tax rate on net long-term capital gains = 15% Yes Yes AMT preferences and adjustments flow through to beneficiaries ratably Yes Yes Trust can adopt the FIFO method for its inventory assets; the grantor had been using lower of cost or market Yes, the trust can choose its own tax accounting method Yes, the trust can choose its own tax accounting method Trust can use a tax year other than the calendar year Generally no. Generally no. Amount of personal exemption $300 (by definition, since it is required to distribute all of its accounting income. $100 or $300 if the trust is required to distribute all of its accounting income. 22. Operating income $500,000 Dividend income 30,000 Tax-exempt interest (0) Net passive loss (no passive income) (0) Deductible portion of fiduciary fees (15,000) Personal exemption (trust distributes no income) (100) Trust taxable income $514,900 Tax on $484,900 ordinary income [(($484,900 $11,950) x 39.6%) + $3,090] $190,378 Tax on dividend income ($30,000 20%) 6,000 Total tax $196,378 24....
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- Fall '13