1) Joseph is the sole trustee of a trust fund of $1,000,000. By the terms of the trust, he is under a duty to invest the money ‘as if he were absolutely entitled to the assets of the trust’. Ronald, an investment broker, approaches him, who offers to pay him $100,000 ‘no questions asked’ if he invests the trust fund with him. Joseph agrees, and is paid the $100,000. Ronald invests the $1,000,000 on the stock market, eventually losing $700,000. Joseph is now insolvent with only $300,000 remaining, and Ronald has fled the country. Question: Advise the beneficiaries of the trust.

1) Joseph is the sole trustee of a trust fund of $1,000,000. By the terms of the trust, he is under a duty to invest the money ‘as if he were absolutely entitled to the assets of the trust’. Ronald, an investment broker, approaches him, who offers to pay him $100,000 ‘no questions asked’ if he invests the trust fund with him. Joseph agrees, and is paid the $100,000. Ronald invests the $1,000,000 on the stock market, eventually losing $700,000. Joseph is now insolvent with only $300,000 remaining, and Ronald has fled the country. Question: Advise the beneficiaries of the trust.

SWFT Corp Partner Estates Trusts

42nd Edition

ISBN:9780357161548

Author:Raabe

Publisher:Raabe

Chapter20: Income Taxation Of Trusts And Estates

Section: Chapter Questions

Problem 32P

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Joseph is the sole trustee of a trust fund of $1,000,000. By the terms of the trust, he is under a duty to invest the money ‘as if he were absolutely entitled to the assets of the trust’. He is approached by Ronald, an investment broker, who offers to pay him $100,000 ‘no questions asked’ if he invests the trust fund with him. Joseph agrees, and is paid the $100,000. Ronald invests the $1,000,000 on the stock market, eventually making a loss of $700,000. With only $300,000 remaining, Joseph is now insolvent and Ronald has fled the country. Advise the beneficiaries of the trust.
Melanie owns units of a mutual fund. She receives a cash distribution of $100 from the fund. She believes that she will not be taxed on the distribution if she reinvests it in additional units of the fund. Is she right? a) Yes b) Yes, but only if the mutual fund is constituted as a trust c) Yes, but only if the mutual fund is constituted as a corporation d) No Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
please help answers both of these
The trustee of the Spratt Trust has the discretion to distribute the income or corpus of the trust in any proportion between the two beneficiaries of the trust, Edwin and Dolly. Under the trust instrument, Edwin must receive $20,000 from the trust every year. In the current year, the trust's accounting income is $100,000, and its DNI is $90,000. In addition to the required $20,000, the trustee pays Edwin $30,000 and Dolly $50,000. What amount income is recognized by the beneficiaries as the result of the distributions? Round any division to three decimal place and use in subsequent computations. If an amount is zero, enter "0". a. Edwin: First-tier Distribution of $fill in the blank 1 and Second-tier Distribution of $fill in the blank 2.b. Dolly: First-tier Distribution of $fill in the blank 3 and Second-tier Distribution of $fill in the blank 4
Donna Stober’s estate has the following assets (all figures approximate fair value): The house, cash, and other assets are left to the decedent’s spouse. The investment land is contributed to a charitable organization. The automobiles are to be given to the decedent’s brother. The investments in stocks and bonds are to be put into a trust fund. The income generated by this trust will go to the decedent’s spouse annually until all of the couple’s children have reached the age of 25. At that time, the trust will be divided evenly among the children. The following amounts are paid prior to distribution and settlement of the estate: funeral expenses of $20,000 and estate administration expenses of $10,000. What value is to be reported as the taxable estate for federal estate tax purposes?
Anton creates an irrevocable trust for his children with a transfer of income-producing property and an insurance policy on the life of Celine, his wife. During the year, the trustee uses $4,800 of the trust income to pay the premiums on the policy covering Celine's life. (Anton, Celine, children or the trust) is taxed on $4,800 of the trust's income.
Montgomery has decided to engage in wealth planning and has listed the value of his assets below. The life insurance has a cash surrender value of $154,000, and the proceeds are payable to Montgomery’s estate. The Walen Trust is an irrevocable trust created by Montgomery’s brother 10 years ago and contains assets currently valued at $800,000. The income from the trust is payable to Montgomery’s faithful butler, Walen, for his life, and the remainder is payable to Montgomery or his estate. Walen is currently 37 years old, and the §7520 interest rate is currently 5.4 percent. Montgomery is unmarried and plans to leave all his assets to his surviving relatives. (Refer to Exhibit 25-1, Exhibit 25-2 and Exhibit 25-4.) Property Value Adjusted Basis Auto $ 37,000 $ 72,000 Personal effects 92,000 127,000 Checking and savings accounts 284,000 284,000 Investments 2,585,000 855,000 Residence 1,485,000 1,065,000 Life insurance proceeds 1,085,000 84,000 Real estate investments…
Your client was the beneficiary of an annuity contract purchased by her stepmother. When the stepmother died, the insurance company paid the client $400,000 and sent her a Form 1099 indicating that the taxable portion (i.e., the amount in excess of the investment in the contract) was $50,000. However, according to the client, her father fraudulently convinced her that he was the intended beneficiary. She gave her father a check equal to the amount she had received from the insurance company. She did not report any of the annuity proceeds in her income tax return. She later discovered the fraud and filed a lawsuit to collect from her father. The IRS has examined your client’s return and has taken the position that she must include the $50,000 in her gross income. Evaluate the IRS’s position.
Richard placed his portfolio of income-producing stock valued at $200,000 into an irrevocable trust. The trust provides that the trustee is to pay to Richard 7% of the initial value of the trust annually for a period of 12 years. After the 12-year term, the trustee is directed to pay the remaining assets in the trust to Richard's daughter. Which of the following are CORRECT statements regarding the income, gift, or estate tax implications of this trust arrangement? Richard will owe a gift tax based on the present value of the remainder interest given to his daughter. Taxation of the income earned by this trust will be affected by the grantor trust rules. If Richard dies during the 12-year term of the trust, the trust assets will be included in his gross estate. The right that Richard has retained in this trust is considered to be "qualified" for purposes of the Chapter 14 rules. A) II and IV B) I and III C) I, II, III, and IV D) I and IV
Gg.184.
The Gordan Trust is an irrevocable trust that pays discretionary income to the beneficiary, Carson. Carson is a partner in a partnership in which he materially participates, and his basis as of 12/31/2022 was $1,000,000. For 2023, the trust had $70,000 of corporate bond interest, net of expenses, and no other income. It did not make any distributions to Carson in 2023. It is now February 1, 2024, and Carson has just learned that his share of loss from the partnership for 2023 will be $80,000. Carson has other ordinary income for 2023 of $50,000. The trustee anticipates distributing $70,000 cash to Carson before the end of February. Carson claims the standard deduction and files as a single individual. Show a comparative mathematical analysis of the alternatives scenarios and provide a summary discussion of the alternatives and your recommendation to the trustee.
Stephen transferred $18,375 to an irrevocable trust for Graham. The trustee has the discretion to distribute income or corpus for Graham's benefit but is required to distribute all assets to Graham (or his estate) not later than Graham's 21st birthday. What is the amount, if any, of the taxable gift?