A.) Explain basic income tax planning strategies for estates.
B.) The Ricardo Trust is a simple trust that correctly uses calendar year for tax purposes. Its income beneficiaries (Lucy and Ethel) are entitled to trust's annual accounting income in shares of one-half each. For the present calendar year, the trust generates ordinary income of $50,000, a long-term capital gain of $25,000 (allocable to corpus), and a trustee commission expense of $10,000 (allocable to corpus). Use format of Figure 20.3 to address the subsequent items.
a. Find how much income is each beneficiary entitled to receive?
b. Evaluate what is the trust's DNI?
c. Determine what is the trust's taxable income?
d. How much gross income is reported by each one of the beneficiaries?