27. The net operating loss deduction
a. cannot exceed 20% of the estate’s or trusts DNI.
b. pass through can be used by a beneficiary regardless of the beneficiary’s itemization of deductions.
c. is deductible only on an estate’s federal estate tax return.
d. is unavailable to estates and trusts.
29. Tax free income is
a. excluded from the computation of DNI for trusts but not estates.
b. included in the computation of DNI for complex trusts but not simple trusts.
c. subject to reduction for pro-rata share of expenses.
d. excluded from the computation of DNI.
31. A simple trust has ordinary gross taxable income of $30,000(current FAI).It also has $5,000 of capital gains allocated to trust principal. It pays a trustee fee of $5,000 which the trust agreement directs must be paid from trust principal. How much is the trust’s accounting income (FAI)?
a. $20,000.
b. $30,000.
c. $25,000.
d. $15,000.
41. Which of the following is not part of accounting principal
a. original trust/estate assets.
b. capital gains.
c. stock dividends.
d. return of capital.
42. The trustee of Bill’s trust is required to pay to Bill’s wife $20,000 per year and, at the trustee’s discretion, may distribute trust income or principal to the other trust beneficiary, Bill’s son. In 2016 the trustee has DNI of $40,000. The trustee distributes $20,000 to Bill’s wife and $50,000 to Bill’s son. How much is Bill’s son taxed on for 2016?
a. $25,000
b. $20,000
c. $10,000
d. $15,000
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