38. Mary\'s will provides in part that she devises the sum of $10,000 each to To

Question

38. Mary's will provides in part that she devises the sum of $10,000 each to Tom, Dan and Harry. During the estate's first income tax year the estate has $6,000 of DNI and distributes $10,000 each to Tom Dan and Harry.

a. The personal representative can elect to have the $6,000 of DNI occur in tax year 2 of the estate.

b. The personal representative can elect to have the DNI taxed all to the estate, or all to Tom, Dan and Harry, or partly to the estate and partly to Tom, Dan and Harry.

c. Tom, Dan and Harry will not be income taxed on their distributions.

d. Tom, Dan and Harry will each be taxed on $2,000 of DNI as first tier beneficiaries.

39. Fiduciary Accounting Income (FAI)

a. cannot be accurately determined until the termination of the estate of trust administration.

b. is determined by federal law.

c. rules trump the Subchapter J rules on income taxation.

d. affects the computation of DNI.

40. Bob died on February 20, 2017. His probate estate (Subchapter J estate) includes

a. $10,000 in joint checking with a surviving child.

b. $30,000 IRA naming his widow as beneficiary.

c. $100,000 life insurance policy payable to his widow.

d. declared but unpaid dividends on stock he owns.

Explanation / Answer

38. The correct answer is Option D i.e. Tom, Dan and Harry will each be taxed on $2,000 of DNI as first tier beneficiaries

39. The correct answer is Option B i.e. is determined by federal law.

40. The correct answer is Option D i.e. declared but unpaid dividends on stock he owns.

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