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- Julie is the beneficiary of a discretionary trust. She is 16 years old. Last year, she received a $3,000 distribution from the trust. Julie had no other sources of income for the year. Who is liable for tax on Julie's trust income?
a. |
Her parents |
|
b. |
Julie |
|
c. |
No one |
|
d. |
Trustee of the trust |
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- Melissa is a very generous single woman. Before this year (2023), she gave over $12,920,000 in taxable gifts over the years and has completely exhausted her applicable credit amount. In the current year, Melissa gave her daughter Riley $100,000 and promptly filed her gift tax return. Melissa did not make any other gifts this year. How much gift tax must Riley pay the IRS because of this transaction? A.$0 B.$33,200 C.$40,000 D.$45,000sabel, a calendar-year taxpayer, uses the cash method of accounting for her sole proprietorship. In late December she received a $41,000 bill from her accountant for consulting services related to her small business. Isabel can pay the $41,000 bill anytime before January 30 of next year without penalty. Assume her marginal tax rate is 37 percent this year and next year, and that she can earn an after-tax rate of return of 6 percent on her investments. Required: What is the after-tax cost if Isabel pays the $41,000 bill in December? What is the after-tax cost if Isabel pays the $41,000 bill in January? Use Exhibit 3.1. Note: Round your answer to the nearest whole dollar amount. Based on requirements a and b, should Isabel pay the $41,000 bill in December or January?Dave has $30,000,000 in assets and is 63 years old. He is married to Olivia. They have never made any gifts before. Assume a personal lifetime exclusion of $11,000,000. a) Assume he makes a gift of $23,000,000 to his extremely worthy nephew Brian. What are the exact (use numbers) tax consequences of this transactions to Dave and Brian? b) He gives $1,000,000 to Anne-Marie. c) Dave and his wife die while skiing near his vacation home in the snow. They have $7,000,000 at their time of death. After their somber half-million dollar funeral, the family deals with the estate tax. What is the estate tax paid? d) Assume all the same facts from A, B, and C, but Dave’s will also states that he would rather die than pay any estate tax. You are his tax advisor. How would you ensure he pays nothing if his wife is not willing to consider divorce? Use specific numbers.
- Prepare a 1040 form for John and Jane Doe. They have one child age 4 who qualifies for the child tax credit. John has w-2 Income 44,500.00 and Jane has W-2 income of 46,300.00. They have interst income of 875.00. They have charitable contributions of 3,000.00. Mortgage interest of 4200.00. Jane had federal income tax of 6,350.00 withheld from her check and John had 6175.00 withheld for federal income tax.DListen Wendy is the settlor of a discretionary trust into which she settled $300,000. Income and capital beneficiaries of the trust include Wendy and her two adult children. Wendy is also the sole trustee. Given this arrangement, who-is responsible for the tax on the income earned by the trust? hois The trustee can elect to have either the trust assume U responsibility for the tax on the income or to allocate responsibility for the tax equally to the three beneficiaries. Wendy. The trust. Wendy and her two children, in equal proportions.Randy established a trust, reserving in himself the power to terminate the trust if he is not satisfied with its operation. After two years, the power to terminate the trust expires. Randy transferred commercial real estate into the trust and specified that the income be payable annually for the benefit of his adult daughter, Michelle. Randy died one year after creation of the trust instrument. One estate tax implication for Randy of this trust is that the trust property is A) included in his estate because a family member is receiving a benefit from the trust. B) not included in his estate because a transfer for the benefit of a minor is exempt from tax. C) included in Randy's estate because he still had the power to terminate the trust at his death. D) not included in his estate because the power to terminate the trust eventually expires.
- Nia is 12 years old, and her only income is $5,500 of interest income from a bank account with money her parents have given her to save for college. If Nia's parent's tax rate is 35 percent, and Nia's portion of income is taxed at 10 percent, what is Nia's income tax liability? O a $550 Ob $1,925 O $1A50 O&$1,299 co CSam owns an insurance agency and makes the following business gifts during the year. Calculate Sam's deduction for business gifts. If an amount is zero, enter "0". Аmount Donee Amount Allowed 1. Ms. Sears (a client) $35, plus $4 shipping 2. Mr. Williams (a tennis partner, 55 not a business prospect or client) 3. Mr. Sample (a client) received $22 and Mrs. Sample (nonclient spouse of Mr. Sample) 42 received a gift valued at $20 4. Various customers (calendars 300 costing $3 each with the company name on them) 5. Mr. Shiver (an employee gift, 175 a watch, for 25 years of continuous service) Total business gift deductionLeilei operates a sole proprietorship, using the accrual basis of tax accounting. Last year, she claimed a $40,125 bad debt deduction for a receivable from Jackie. But this year, Jackie sent her a check for $28,088, which Leilei accepted in full satisfaction of the receivable. How much gross income does Leilei record for the item this year? $fill in the blank 1.
- Maggie is filing taxes as a single filer with no kids. Her gross yearly income is $136,680, and her tax deductible purchases are: • Charitable contributions: $4,642 • Mortgage interest: $4,614 • Educational Expenses: $4,150 Compute her final income tax using the following information: Individual Taxpayers If Taxable Income Is Between: The Tax Due Is: 0- $9,875 10% of taxable income $9,876- $40,125 $987.50 + 12% of the amount over $9,875 $40,126 - $85,525 $4,617.50 + 22% of the amount over $40,125 $85,526 - $163,300 $14,605.50 + 24% of the amount over $85,525 $163,301 - $207,350 $33,217.50 + 32% of the amount over $163,300 $207,351 - $518,400 $47,367.50 + 35% of the amount over $207,350 $518,400 $156,235 + 37% of the amount over $518,400 Round your answer to the nearest dollar. Recall the standard deduction for single filers: $12,400In 2023, Jack, age 12, has interest income of $6,540 on funds he inherited from his aunt and no earned income. He has no investment expenses. Christian and Danielle (his parents) have taxable income of $88,150 and file a joint return. Assume that no parental election is made. Click here to access the 2023 tax rate schedule. If required, round the tax computations to the nearest dollar. Jack's net unearned income is Jack's allocable parental tax is Jack's total tax is 2,200 X 264 X. 264 X.11. Jada wants to transfer some assets to a trust this year; the income beneficiaries will be her two grandchildren. The trust income and assets will be used to pay the grandchildren's tuition to private high schools and universities. Upon the younger grandchild's graduation, the trust assets will return to Jada's ownership. Identify tax issues related to Jada's plan to use a temporary fiduciary entity.
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