Mod 39 Taxation Of Estates And Trusts Flashcards Preview

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Flashcards in Mod 39 Taxation Of Estates And Trusts Deck (68):
1

Transfer tax is also known as...

Gift tax

2

Final estate tax return is due...

9 months after death of decedent

3

Future payments out of a trust are...2

1 Taxable

2 $14,000 exclusion does not apply

4

What form is filed for estate tax?

Form 706

5

Neumonic for items deducted from estate tax 7

F
A
D
D
Medical
Casualty
Charitable

6

Estate tax neumonic, what does FADD stand for?

Funeral
Administrative
Debts of
Decedent

7

When are medical expenses deductible from estate tax?

Final medical expenses are deducted

8

For estate tax purposes, if you want final medical expenses deducted on Form 706 (instead of itemized deductions on schedule A) if...

Medical expenses are paid in final year of decedent

9

Concurrently held property

Property held with other people

10

Under tax law, under tenancy in common and joint tenancy if a tenant dies, and they own 30% of $1 million property...

$300,000 goes to their estate

11

If estate is the beneficiary, life insurance proceeds are...

Gross asset of your estate

12

Gift taxes paid within 3 years of death go...

Into decedent's estate

13

Unlimited exclusion for gifts given for tuition or medical must be made...

Directly to the provider

14

What is another name for applicable credit?

Transfer tax credit

15

When property of a decedent is held in joint tenancy with another, what amount goes in the estate?

% decedent paid X FMV

16

Foreign death taxes is...

A credit

17

Unpaid, is...2

1 Debt of decedent

2 valid deduction from decedent's gross estate

18

Alternative valuation date can be elected only if it's use decreases both...2

1 value of gross estate and

2 estate tax liability

19

A life insurance policy payable to the estate's executor as the estate's representative are...

Always includible in decedent's gross estate

20

Generation skipping transfer is imposed in...

Addition to gift tax

21

Generation skipping transfer tax is imposed at the...

Highest tax rate under the transfer tax rate schedule

22

Form 1041 is the...

U.S. Fiduciary Return

23

Tax years of trusts and estates?

1 trust must adopt calendar year

2 estate may adopt fiscal year or calendar year

24

3 situations when a trust must file a return

1 gross income of $600 or more

2 any taxable income

3 nonresident alien is beneficiary

25

AMT applies to...

Trusts

26

Estates and trusts must make estimated payments like...

Individuals

27

When do estates not need to make estimated payments?

Within 2 years of decedent's death

28

Simple trust 3 characteristics

1 trustee distributes app income to beneficiary each year

2 can't make charitable contributions

3 makes no distribution of trust principal

29

Trust corpus

Trust principal

30

Complex trust, define

Examples

Any trust other than simple trust

Ex. Trust can make charitable contributions and distribute corpus

31

On Form 706, administrative and funeral expenses can be...

Deducted from estate if reasonable

32

Charitable contributions of a trust can only be deducted if...

They come out of income of trust or estate

33

Any unused capital loss carryover...

Can't be deducted on final 1040

34

DNI

Distributable net income

35

Distributable net income, define

Whatever is taxed to beneficiary of trust

36

Decedent income is reported on...

Both fiduciary income tax return and estate tax return

37

Ordinary and necessary administration expenses paid by the fiduciary of an estate are deductible on the fiduciary income tax return only if...

Estate tax deduction is waived for these expenses

38

Form 1023 (tax exempt organizations) must be filed...

15 months after end of month organization is formed

39

Tax exempt organizations that don't need to file

Organizations other than a foundation, with gross receipts of less
than $5,000

40

What is the filing date for most tax exempt organizations?

May 15th (15th day of 5th month)

41

Related income of tax exempt organizations 4

1 activities performed by volunteers
2 income from investments if it is not debt financed
3 rental income
4 sale of merchandise received as gifts

42

What does UBI stand for?

Unrelated business income

43

What amount of unrelated business income goes untaxed?

First $1,000

44

Exempt organizations can incorporate and...

Issue capital stock

45

To qualify as an exempt organization other than a church or an employee's qualified pension or profit sharing trust an applicant must...

File a written application with the IRS

46

A tax exempt religious organization cannot conduct retreats for business organizations because it's...

Not a religious business activity

47

Organization will lose exempt tax status after...

3 years of producing unrelated services

48

Nexus

Nonresident required to pay tax where they do not have a presence

49

U.S. Corporations are not taxed on money earned by a foreign subsidiary until...

Transferred to parent in form of dividends

50

Foreign credit can be deducted as...

Credit or deduction on the tax return

51

Foreign credit carry back and carry forward.

carryback = 1 year

Carry forward = 10 years

52

Maximum foreign credit calculation for current year

Max foreign credit =
(Foreign taxable income/worldwide income) X US taxes paid

53

What does UDITPA stand for?

Uniform Division of Income for Tax Purposes Act

54

Uniform Division of Income for Tax Purposes Act (UDITPA) provides rules for...

Allocating income among states and foreign countries

55

Under UDITPA, Nonbusiness income is allocated as follows:

Interest and dividends are allocated to...

State of taxpayer's commercial domicile

56

Under UDITPA, Nonbusiness income is allocated as follows:

Net rents and royalties from real property are allocated to...

State where property is located

57

Under UDITPA, Nonbusiness income is allocated as follows:

Capital gains and losses from sales of real property are allocated to...

State where property is located

58

Under UDITPA, Nonbusiness income is allocated as follows:

Capital gains and losses from the sale of intangible personal property are allocated to...

State of taxpayer's commercial domicile

59

Under UDITPA, Nonbusiness income is allocated as follows:

Net rents and royalties from tangible property are allocated to...

State to extent that property is used in that state

60

Under UDITPA, Nonbusiness income is allocated as follows:

Alternatively, all rents and royalties from tangible personal property will be allocated to the state of the taxpayer's commercial domicile if the taxpayer is...2

1 not organized in or

2 taxable in state which property is utilized

61

Under UDITPA, Nonbusiness income is allocated as follows:

Capital gains and losses from sales of tangible personal property are allocated to...

State property was situated during time of sale

62

Under UDITPA, Nonbusiness income is allocated as follows:

Alternatively, gains and losses will be allocated to state of taxpayer's commercial domicile if the taxpayer is...

Not taxable in state in which property was situated

63

Under UDITPA, Nonbusiness income is allocated as follows:

Patent and copyright royalties are allocated to state to extent that patent and copyright is...

Utilized by payer in that state

64

Under UDITPA, Nonbusiness income is allocated as follows:

Alternatively, Royalties will be allocated to state of taxpayer's commercial domicile if taxpayer is...

Not taxable in state in which patent or copyright was utilized

65

U.S. Taxation of foreign persons

Nonresident foreign persons are subject to 2 categories of income

1 income connected with US trade or business

2 passive, fixed annual income

66

A nonresident alien who performs personal services within the U.S. is considered to be...

Engaged in U.S. trade or business

67

Performance of personal services will not constitute US trade or business income if nonresident alien is...3

1 present less than 90 days during year

2 less than $3,000 received as compensation

3 works in foreign office of U.S. person

68

Federal tax legislation process 5

1 House of Representatives
2 senate finance committee
3 must be passed on floor of house and senate
4 uniform bill goes to president
5 tax legislation amends IRC

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