51) Identify which of the following statements is true.
A) An individual cannot be both a tier-1 and tier-2 beneficiary in the same year.
B) Tier-2 beneficiaries potentially can receive more favorable tax treatment than tier-1 beneficiaries.
C) Bequests of specific sums of money when distributed out of an estate result in the recognition of gross income by the beneficiary receiving the bequest.
D) All of the above are false.
52) A trust has net accounting income of $30,000, but distributable net income (DNI) of only $25,000 because certain expenses are charged to principal. The trust is required to distribute $10,000 to Alice and it makes a discretionary distribution of $20,000 to Ben. The trust has no tax-exempt income. The amount that Ben reports as gross income is
D) none of the above
53) A trust has net accounting income and distributable net income (DNI) of $60,000, all from taxable sources. The trustee is required to distribute $40,000 of current income to Harry. In addition, the trustee makes a discretionary distribution to Harry of $10,000 and a discretionary distribution to Susan of $30,000. $20,000 of the $40,000 total discretionary distributions is from corpus. Gross income reportable by Harry is
54) Martha died and by her will, specifically bequeathed, and the executor distributed, $20,000 cash and a $70,000 house to Harold. The distributions were made in a year in which the estate had $65,000 of DNI, all from taxable sources. The maximum Harold will be required to report as gross income as a result of these distributions is
55) An estate made a distribution to its sole beneficiary of $15,000 for the year. This distribution was not the result of a specific bequest. The estate had $40,000 of taxable interest and $34,000 of expenses attributable to earning that interest. What amount of the distribution is taxable to the beneficiary?
56) Fred, a cash-basis taxpayer, died on January 15, 2012. In 2013, the estate made a $9,000 distribution from estate income to Fred's sole heir. The estate had $20,000 of taxable interest and a $10,000 net long-term capital gain allocable to corpus. The estate incurred $5,000 in expenses attributable to the estate income. What is the estate's distributable net income (DNI)?
57) Apple Trust reports net accounting income of $40,000, all from taxable sources. The trustee is required to distribute $15,000 annually to Megan. The trustee also makes discretionary distributions of $30,000, $7,500 to Megan and $22,500 to Caroline. The trust pays $5,000 of the discretionary distributions from corpus. What is the amount of the distribution deduction?
58) An example of income in respect to a decedent (IRD) for a cash method of accounting taxpayer is
A) interest earned but not received prior to death.
B) salary earned but not received prior to death.
C) gain from an installment sale entered into before death.
D) All of the above are examples.
59) Joyce passed away on January 3 while on an extended holiday cruise celebrating a very successful, and most profitable previous year. Joyce was the chief executive officer of the Quillip Corporation. After the independent audit of Quillip's last year's financial statements was completed in February of this year, Joyce's estate received a $1,000,000 bonus check resulting from last year's corporate profits. Joyce's estate also sold Quillip stock for $500,000 in February of this year. Joyce originally purchased this stock eight years ago for $10,000. The stock was valued at $495,000 on her date of death. Solely based on the above facts, how much income in respect of a decedent should Joyce's estate report in the current year?
60) Identify which of the following statements is true.
A) Income in respect of a decedent (IRD) is the gross income the decedent earned before death but had not collected before death.
B) An estate may deduct up to $5,000 of capital losses against the ordinary income taxable in the estate.
C) An example of income in respect of a decedent (IRD) is the gain recognized on property sold by the estate after the decedent's death.