Counsell is a simple trust that correctly uses the

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Survey of Accounting
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Chapter 7 / Exercise 8
Survey of Accounting
Warren
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134. Counsell is a simple trust that correctly uses the calendar year for tax purposes. Its income beneficiaries (Kathie, Lynn, Mark, and Norelle) are entitled to the trust’s annual accounting income in shares of one-fourth each. For the current calendar year, the trust has ordinary business income of $40,000, a long-term capital gain of $20,000 (allocable to income), and a trustee commission expense of $4,000 (allocable to corpus). Use the format of Figure 20.3 in the text to address the following items.a.How much income is each beneficiary entitled to receive?b.What is the trust’s DNI?c.What is the trust’s taxable income?d.How much is taxed to each of the beneficiaries?135. The Gomez Trust is required to distribute $80,000 annually, split equally between its two income beneficiaries, Lara and Byron. If trust income is not sufficient to pay these amounts, the trustee can invade corpus to the extent necessary. During the current year, the trust has DNI of $60,000. Byron receives an additional $30,000 discretionary corpus distribution.a.How much of the $40,000 distributed to Lara is included in her gross income?b.How much of the $70,000 distributed to Byron is included in his gross income?c.How much of these distributions are first-tier or second-tier?
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Survey of Accounting
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Chapter 7 / Exercise 8
Survey of Accounting
Warren
Expert Verified
136. The Willa estate reports $100,000 DNI, composed of $50,000 dividends, $20,000 taxable interest, $10,000 passive income, and $20,000 tax-exempt interest. Willa’s two noncharitable income beneficiaries, Shanna and Tom, receive distributions of $75,000 each. How much of each class of income is deemed to have been distributed to Shanna? To Tom? Use the following template to structure your answer.BeneficiaryAmountReceivedDNI, Income TypeCorpus,Non-taxableDividendsTaxableInterestPassiveExemptInterestShannaTomTotals in DNI137. The trustee of the Miguel Trust can distribute any amount of accounting income and corpus to the trust’s income beneficiaries, Paula and George. This year, the trust incurred the following.Taxable interest income$40,000Tax-exempt interest income20,000Long-term capital gains—allocable to corpus10,000Fiduciary’s fees—allocable to corpus6,000The trustee distributed $40,000 to Paula and $40,000 to George.a.What is Miguel’s trust accounting income?b.What is Miguel’s DNI?c.What is Miguel’s taxable income?d.How much gross income is recognized by each of the beneficiaries?
138. The Yan Estate is your client, as are many of the decedent’s family members. Determine the tax effects of the indicated losses for the Yan Estate for both tax years. The estate holds a variety of investment assets, which

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