REG Study Group Q4 2014 - Page 277

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  • November 28, 2014 at 9:23 pm #633356
    Anonymous
    Inactive

    1?

    November 28, 2014 at 9:23 pm #633357
    REGTaker
    Member

    Neither.

    A spendthrift trust is created for a beneficiary that is wasteful with money. The trust prevents the beneficiary from selling the funds or property and bars seizure from creditors of the beneficiary.

    Bing cannot pay Sims’s share of trust income to either the bank holding a home mortgage note deficiency judgment or the judgment creditor as a result of an automobile accident. This trust is being funded with an office building, making it an express trust of real property; it must be in writing under the statute of frauds.

    November 28, 2014 at 9:24 pm #633359
    REGTaker
    Member

    The charitable contribution deduction on an estate’s fiduciary income tax return is allowable:

    A.

    if the decedent died intestate.

    B.

    to the extent of the same adjusted gross income limitation as that on an individual income tax return.

    C.

    only if the decedent’s will specifically provides for the contribution.

    D.

    subject to the 2% threshold on miscellaneous itemized deductions.

    November 28, 2014 at 9:25 pm #633360
    Anonymous
    Inactive

    C

    November 28, 2014 at 9:27 pm #633361
    REGTaker
    Member

    A distinguishing feature between the making of an inter vivos gift and the creation of a trust is that:

    A.

    a gift may be made orally whereas a trust must be in a signed writing.

    B.

    generally, a gift is irrevocable whereas a trust may be revoked in certain cases.

    C.

    in order to create a valid trust, the creator must receive some form of consideration.

    D.

    the beneficiary of a trust must be notified of the trust’s creation.

    November 28, 2014 at 9:28 pm #633362
    Anonymous
    Inactive

    C? What was the charitable contributions answer?

    November 28, 2014 at 9:30 pm #633363
    REGTaker
    Member

    Sorry. I thought I typed Correct!! for the charitable contributions one.

    The answer to the gift versus trusts is B

    November 28, 2014 at 9:31 pm #633364
    REGTaker
    Member

    Gifts aren't revocable because if they were, they wouldn't be completed gifts.

    November 28, 2014 at 9:32 pm #633365
    Anonymous
    Inactive

    Darn – I said C because I thought I read somewhere that gifts shouldn't have any consideration with them.

    November 28, 2014 at 9:33 pm #633366
    REGTaker
    Member

    I chose A and I have no idea why. 🙂

    Which of the following expenditures resulting from a trust’s ownership of commercial real estate should be allocated to the trust’s principal? I always get this next one wrong too.

    A.

    Building management fees

    B.

    Depreciation

    C.

    Insurance premiums

    D.

    Mortgage principal payments

    November 28, 2014 at 9:35 pm #633367
    Anonymous
    Inactive

    D?

    November 28, 2014 at 9:36 pm #633368
    REGTaker
    Member

    D is correct!!

    November 28, 2014 at 9:37 pm #633369
    REGTaker
    Member

    Arno plans to establish a spendthrift trust naming Ford and Sims life income beneficiaries, Trip as the residuary beneficiary, and Bing as trustee. Arno plans to fund the trust with an office building. Assume that an enfor­ceable trust was formed. Which of the following will be allocated to trust principal?

    A.

    Annual property tax: Yes; Monthly mortgage principal payment: Yes

    B.

    Annual property tax: Yes; Monthly mortgage principal payment: No

    C.

    Annual property tax: No; Monthly mortgage principal payment: Yes

    D.

    Annual property tax: No; Monthly mortgage principal payment: No

    November 28, 2014 at 9:37 pm #633370
    Anonymous
    Inactive

    What is the explanation for that?

    November 28, 2014 at 9:38 pm #633371
    Anonymous
    Inactive

    D?

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