Income Taxation Of Trusts And Estates - Sample Questions 1 - 5
1. All of the following are characteristics or true statements pertaining to an "inter-vivos " revocable trust EXCEPT:
A) The trust can be modified at any time while the grantor is alive.
B) The grantor can claim all income from the trust on their individual Form 1040.
C) This is a good trust for probate avoidance.
D) This is a good trust for asset protection.
2. Which of the following are characteristics of a Simple Trust?
(1) Corpus can be distributed to the beneficiary.
(2) Beneficiaries can be charitable.
(3) Capital gains are considered as part of the corpus.
(4) Income is taxable to the recipient even if left in the trust to accumulate.
(5) Trust is given a deduction for income paid out to a beneficiary.
A) 1, 2 and 3 only
B) 2, 3 and 4 only
C) 3 and 4 only
D) 3, 4 and 5 only
3. All of the following are TRUE statements concerning Trust and Estate Taxation EXCEPT:
A) The maximum estate tax rate is 45%.
B) Trust income above $11,950 is taxed at 39.6%.
C) Trusts must file Form 1041 in years where the trust income is $600 or more.
D) The estate tax exclusion amount is $5,250,000 in 2013.
4. Lester (divorced, age 75), has a traditional IRA with a local bank account worth $500,000. In September of this year, he died and named his daughter Jennifer as the beneficiary of his IRA. Before Jennifer had a chance to convert the IRA into an Inherited IRA, it automatically paid out Lester's required minimum distribution for the year. This check would be best described as:
A) Return of principal
B) Tax free earnings paid to a beneficiary
C) Income in respect of a decedent
D) Section 179 income inadvertently paid to a survivor
5. All of the following are good reasons to establish an Irrevocable Trust EXCEPT:
A) Ownership of Life Insurance
B) Maintain control of assets
C) Asset protection
D) Charitable gift planning
Mutual Funds & ETFsFind out about the PowerShares DB Commodity Tracking ETF, and explore a detailed analysis of the fund that tracks 14 distinct commodities using futures contracts.
Mutual Funds & ETFsFind out about the PowerShares FTSE RAFI U.S. 1000 ETF, and explore detailed analysis of the fund that invests in undervalued stocks.
Options & FuturesUsing iron ore options is a way to take advantage of a current downslide in iron ore prices, whether for producers or traders.
Mutual Funds & ETFsFind out about the Vanguard Small-Cap Value ETF, and explore detailed analysis of its characteristics, suitability, recommendations and historical statistics.
Mutual Funds & ETFsLearn about the Vanguard Intermediate-Term Corporate Bond ETF, and explore detailed analysis of the fund's characteristics, risks and historical statistics.
Mutual Funds & ETFsExplore detailed analysis and information of the top three Swiss exchange-traded funds that offer exposure to the Swiss equities market.
SavingsWomen's risk aversion, penchant for research – and lack of male-style "irrational exuberance" – means their investing strategies often put them ahead.
Investing BasicsRisk-adjusted return is a measurement of risk for an investment or portfolio.
Investing BasicsBuying below the margin of safety minimizes the risk to the investor.
Mutual Funds & ETFsFind out about the PowerShares S&P 500 Downside Hedged ETF, and learn detailed information about characteristics, suitability and recommendations of it.
The amount of risk that an insurance company retains after subtracting ...
Coverage that provides financial protection to investors, financial ...
The maximum loss from a peak to a trough of a portfolio, before ...
The absolute level of a fund's investments.
A technique used by insurance companies to calculate loss reserves.
The financial benefit that a risk-taking activity will bring ...
The Federal Deposit Insurance Corporation, or FDIC, is a government-run agency that provides protection against losses if ... Read Full Answer >>
The rise of index trading may increase the overall vulnerability of the stock market due to increased correlations between ... Read Full Answer >>
The term delta refers to the change in price of an underlying stock or exchange-traded fund (ETF) as compared to the corresponding ... Read Full Answer >>
An investor who is overweight in a particular sector risks a loss in value for the portfolio if there is a downturn in that ... Read Full Answer >>
The retail sector consists of companies operating in multiple industries such as specialty retail, general retail, food and ... Read Full Answer >>
Like all equity investments, insurance companies present investors with market risk. Insurance companies, like banks, also ... Read Full Answer >>