The income taxation of fiduciary entities is governed Internal Revenue Code? a.
ID: 2543789 • Letter: T
Question
The income taxation of fiduciary entities is governed Internal Revenue Code? a. C b. J c. K d. S argely by which subchapter of the e Roz trust received taxable income of $20,000 and $10,000 of tax-exempt interest. Th Th e trustee paid fiduciary fees of $6,000 and a charitable contribution, as authorized by the trust agreement of: S0. , of $9,000. Roz is allowed a charitable contribution deduction b. $3,000 c. $6,000 d. $9,000. The Roz trust received taxable income of $20,000 and $10,000 of tax-exempt interest. The trustee paid fiduciary fees of $6,000 and a charitable contribution, as authorized by 3. the trust agreement, of $9,000. Under the trust agreement, a charitable contribution a. $0. b. $3,000. C. $6,000. d. $9,000Explanation / Answer
Answer 1:
The income taxation of fiduciary entities is governed by subchapter J of the Internal Revenue Code.
Answer 2:
Roz will be allowed to take deduction of charitable contribution of $9,000 as there is no condition attached to the trust of charitable contribution has to be made from taxable income only. Thus, the whole amount of charitable contribution of $9,000 will be allowed as deduction to Roz.
Answer 3:
Roz will be allowed to take deduction of charitable contribution of $6,000 as the total income of Roz is $30,000 out of which $10,000 is tax-exempt interest income. Thus, the total charitable contribution of $9,000 will not be allowed as deduction rather the proportionate contribution, i.e. (9, 000 X 20,000 / 30,000) = $6,000 will be allowed as deduction.
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