The trust’s final tax termination year ends on June 30. The trust realized $5,00
ID: 2592480 • Letter: T
Question
The trust’s final tax termination year ends on June 30. The trust realized $5,000 on capital gain on May 1. The capital gain income
a. will be taxed to the trust as not part of DNI.
b. will be included in DNI.
c. cannot be offset by capital losses in year of termination.
d. will be taxed separately to the beneficiaries but is not part of DNI.
Estate’s income tax year is February 1 through January 31. Personal representative makes a distribution to residuary beneficiary Z, a calendar year taxpayer, on March 12017 that carries out $5,000 DNI to Z. Z will report the income
a. on her 2018 Form 1040 only.
b. on her 2017 Form 1040 only.
c. on her 2018 1040 if she properly so elects.
d. on her 2017 1040 if she properly so elects.
Explanation / Answer
The trust’s final tax termination year ends on June 30. The trust realized $5,000 on capital gain on May 1. The capital gain income
The answer for the question is b. It would be included in DNI.
Estate’s income tax year is February 1 through January 31. Personal representative makes a distribution to residuary beneficiary Z, a calendar year taxpayer, on March 12017 that carries out $5,000 DNI to Z. Z will report the income.
The answer for the question is c. It would be included n her 2018 1040 if she properly so elects.
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