1. The trustee of a testamentary trust had distributable net income of $30,000 on December 31, 2014, the last day of the trust’s income tax year. On March 3, 2015 the trustee made a distribution of all distributable net income on hand as of December 31, 2014 to the trust beneficiaries. The trustee
a. may elect to have the distribution treated as though made on December 31, 2014.
b. cannot elect to have the distribution treated as though made on December 31, 2014.
c. is limited to the lesser of distributable net income or trust accounting income to be deemed as distributed on December 31, 2014.
d. cannot elect to have the distribution treated as though made on the prior December 31 for the first income tax year of the trust.
2. Which of the following statements is incorrect?
a. The taxation of trusts and estates is governed by Subchapter J of the Internal Revenue Code.
b. Form 1041 illustrates the semi-conduit theory of income taxation since all taxable income received by a trust or estate is taxed to the beneficiaries.
c. The income tax rates applied to trusts and estates are highly compressed compared to income tax rates for individuals.
d. When Shirley died, her estate included 200 shares of Stock in Corporation. On the date of her death the highest price the Stock traded for was $80 and the lowest price was $72. The estate tax date of death value for the Stock in Corporation is $15,200.