Business income Tax Question # 00062879 Posted By: mdemba Updated on: 04/23/2015 05:57 PM Due on: 04/24/2015 Subject Accounting Topic Accounting Tutorials: 1 See full Answer Question 24. LO.2, 3 The Allwardt Trust is a simple trust that correctly uses the calendar year for tax purposes. Its income beneficiaries (Lucy and Ethel) are entitled to the trust’s annual accounting income in shares of one-half each.For the current tax year, Allwardt reports the following.Ordinary income $100,000Long-term capital gains, allocable to corpus 30,000Trustee commission expense, allocable to corpus 5,000Use the format of Figure 28.3 to address the following items.a. How much income is each beneficiary entitled to receive?b. What is the trust’s DNI?c. What is the trust’s taxable income?d. How much gross income is reported by each of the beneficiaries?25. LO.2, 3 Assume the same facts as in Problem 24, except that the trust instrument allocates the capital gain to income.a. How much income is each beneficiary entitled to receive?b. What is the trust’s DNI?c. What is the trust’s taxable income?d. How much gross income is reported by each of the beneficiaries?19. LO.1 Complete the following chart, indicating the comparative attributes of the typical simple trust and complex trust by answering yes/no or explaining the differences between the entities where appropriate.Attribute Simple Trust Complex TrustTrust could incur its own tax liability for the yearTrust generally distributes all of the DNITrust can deduct its charitable contributions in the year of or the year after paymentTrust could claim a foreign tax creditMaximum tax rate on net long-term capital gains = 20%Attribute Simple Trust Complex TrustAMT preferences and adjustments flow through to beneficiaries ratablyTrust can adopt the FIFO method for its inventory assets; the grantor had been using lower of cost or marketTrust can use a tax year other than the calendar yearAmount of personal exemption Rating: 4.9/5
Solution: Accounting Solutions