Flashcards in Trusts and Estates Deck (18):
Working out the Distribution Deduction - NO tax exempt or cap gains
Distributable (taxable) Net Income: Doesn't include tax exempt interest
Required Distribution: Everything but capital GAins
Expenses attributable to Interest Income: Must be allocated to exempt/nonexempt
Trustee Commission: Allocated to tax exempt/captal gains/(dividends and interest)
Required (Gross)Distribution: All investment income before netting out expenses (not CApital gains)
Distributable (taxable) Net Income: Net of tax exempt interest and capital gains
Distribution Deduction: Lesser of the Required Distribution or DNI
Forget the lesser of nonsense for the distribution deduction being the lesser of the required distribution or the distributable net income. And it's actually should be called Distributable Taxable Net Income.
The DTNI is All the taxable income from non-capital gain transactions less a proportion of the investment expenses.
Trustee Commissions for Production of Income: Allocated among everything
Interest is just taxable/non-taxable
Not sure where the commissions attributable to cap gain ends up on the tax return, but anyway
Taxable Distribution Deduction: Meaning what is the taxable income after expenses that can be distributed.
Add everything taxable that can be distributed
Now figure out the allocation of expenses to taxable interest versus non-taxavle interest
Tax Exempt Interest 20 + Taxable 80 = 100 taxable = 80% of Expenses 5000 = 4000
Now figure out allocation of expenses to (net distributable interest income) + dividends distributable + capital gain income. (100-5) + 30 +25 = 150. How much is due to the cap gains 25/150 = 17%. and the rest 83% is attributable to the distributable income (both taxable and non-taxable) which is $12,450.
So I would take 80+301-12,450 =
Where are the administration expenses (and debts of a decedent - as in the one who is deceased) deducted.
The estate return
The estate's income tax return 1041
On the state return
Though you can file a form to get a waiver and deduct them on the estates income tax return
Teh estate tax return is for the estate tax
The estate income tax return form1041 is for the income earned by the estate
For A TRUST ACCOUNTING INCOME IS WHAT?
IT'S JUST THE INCOME AMOUNTS THAT AREN'T ALLOCABLE TO CORPUS AND BEFORE ANY ALLOCATION OF EXPENSES
So Dividends, Taxable Interest, Non-taxable interest
For medical expense gifts and tuition gifts, they can be unlimited provided what?
They are paid to the hospital or the school
What Section of the IRS code deals with estates trusts beneficiaries
What Section Deals with Estates
TCP Title 26
Sub-Title A Income Taxes
Chapter 1 - Normal Taxes and Surcharges
Sub-Chapter - J Estates Trusts Beneficiaries
Sub-Title B: Estate and Gift Taxes
What section of the IRS code deals with the gift tax
Sub-Title B: Estate and Gift Tqaxes
Chapter 12: Gift Tax
For gifts, what do you use FMV or the basis.
The FMV I would think the basis?
If you deed half your personal residence to your daughter is that a gift?
If you set up a bank account with someone is that a gift?
Yes, half is a gift.
Not a gift until they draw money out.
If you sell your business for %75,000 less than MV is that a gift?
2015 gift tax exclusion is
Are life insurance proceeds includible in gross estate
How about reportable on estate income tax return
Are always included in gross instate
No = I don't think they are taxable
How high do your assets have to be for you to file an estate tax return.
A resulting trust is formed when what
HOw is it different from a cy pres trust
Express purpose fails
fullfillment of trust purpose
I guess because there's still money left in the latter
Notice it's not a new trust
Cy Pres doctrine - Replace the original charity with a comparable charity but doesn't create a new trust, honestly what a bunch of horse shit, how would you possibly distinguish that
Constructive Trust happens when
When there's illegal holding of some property and the person who shouldn't be holding it forms a trust
Resulting Trust is what
REsults from failure of original trust - it's a new trust