1. If tax exempt interest is received by an estate/trust
a. it is required that a pro-rata portion of administration expenses be allocated to it.
b. no reduction in deductible administration expenses is required.
c. it does not enter into DNI.
d. the tax exempt interest is considered retained and not distributed by the estate/trust.
2. Bob died on January 30, 2017. His probate estate (subchapter J estate) includes:
a. $1,200 salary due him from his employment.
b. $100,000 life insurance policy payable to his widow.
c. $75,000 IRA naming his widow as beneficiary.
d. $10,000 in joint checking account with a surviving child.
3. Capital losses
a. can only offset capital gains in the final income tax year of an estate.
b. are treated the same in DNI as capital gains.
c. are limited to sales and other dispositions of tangible and intangible personal property.
d. cannot be carried over in an estate or trust.
4. Which of the following is not normally part of accounting income under Florida law?
a. rents.
b. dividends
c. capital gains.
d. municipal bond interest.
5. Attorney’s fees
a. can only be deducted on the Form 1041 to the extent they exceed 2% of adjusted gross estate or trust income.
b. can be deducted only on an estate’s federal estate tax return if an estate tax return is required to be filed. If no federal estate tax return is required to be filed, they can be deducted on the fiduciary income tax return, Form 1041.
c. can only be deducted on the estate’s or trust’s Form 1041 if a section 645 election is made by the fiduciary.
d. can be deducted on the fiduciary income tax return Form 1041 or on the federal estate tax return for a decedent’s estate if a federal estate tax return is required.
6. Capital gain from the sale of assets of an estate or trust
a. is not a part of distributable net income unless it is short-term capital gain.
b. never enters into the computation of distributable net income.
c. does not ordinarily enter into the computation of distributable net income unless it’s the last tax year of the estate or trust.
d. according to the Internal Revenue Code cannot be used to satisfy a dollar bequest to charity unless it is the only income available to the estate or trust.