REG Study Group Q4 2014 - Page 276

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  • November 28, 2014 at 9:05 pm #633341
    REGTaker
    Member

    Which of these would ordinarily be distributed to a trust income beneficiary?

    Royalties

    Stock received in a stock split

    Cash dividends

    Settlements of claims for damages to trust property

    November 28, 2014 at 9:06 pm #633342
    Anonymous
    Inactive

    What about the rest ($10K)? Is that ROC?

    November 28, 2014 at 9:07 pm #633343
    Anonymous
    Inactive

    C – Cash dividends?

    November 28, 2014 at 9:10 pm #633344
    REGTaker
    Member

    It wouldn't be a return of capital because they didn't contribute any capital since it is a trust. I'm not sure what happens to the remainder. Is it nontaxable so it's not included in their income?

    November 28, 2014 at 9:10 pm #633345
    REGTaker
    Member

    Sorry–I was trying to post questions without the choices. Dividends are correct and one more of those options would be considered income as well.

    November 28, 2014 at 9:11 pm #633346
    Anonymous
    Inactive

    Settlements of claims?

    November 28, 2014 at 9:12 pm #633347
    REGTaker
    Member

    No–Royalties.

    Damages paid against trust property gets allocated to corpus and additional stocks would be added to corpus. The dividends on those additional stock would be income.

    November 28, 2014 at 9:13 pm #633348
    REGTaker
    Member

    Are administrative fees paid by the estate deductible on the estate return, the decedent's return, both returns, or neither return?

    November 28, 2014 at 9:15 pm #633349
    REGTaker
    Member

    Sorry–let me rewrite that question.

    Ordinary and necessary administration expenses paid by the fiduciary of an estate are deductible:

    A.

    only on the fiduciary income tax return (Form 1041) and never on the federal estate tax return (Form 706).

    B.

    only on the federal estate tax return and never on the fiduciary income tax return.

    C.

    on the fiduciary income tax return only if the estate tax deduction is waived for these expenses.

    D.

    on both the fiduciary income tax return and on the estate tax return by adding a tax computed on the proportionate rates attributable to both returns.

    November 28, 2014 at 9:15 pm #633350
    Anonymous
    Inactive

    C

    November 28, 2014 at 9:16 pm #633351
    REGTaker
    Member

    Correct!!!

    What is the standard deduction for estates and trusts?

    November 28, 2014 at 9:17 pm #633352
    Anonymous
    Inactive

    $0.

    November 28, 2014 at 9:18 pm #633353
    REGTaker
    Member

    Correct!!!

    Absent specific directions, which of the following parties will ordinarily receive the assets of a terminated trust?

    A.

    Income beneficiaries

    B.

    Remaindermen

    C.

    Grantor

    D.

    Trustee

    November 28, 2014 at 9:19 pm #633354
    Anonymous
    Inactive

    Wait! I said A, but I want to change my answer to B.

    November 28, 2014 at 9:21 pm #633355
    REGTaker
    Member

    B is correct!!

    Arno plans to establish a spendthrift trust naming Ford and Sims as life income beneficiaries, Trip as residuary beneficiary, and Bing as trustee. Arno plans to fund the trust with an office building.

    Assume that an enforceable trust was formed. Sims has the following personal creditors:

    1. Bank holding a home mortgage note deficiency judgment

    2. Judgment creditor as a result of an automobile accident

    To which of these creditors can Bing pay Sims’s share of trust income?

    1, 2, both, neither

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