INCOME TAXATION OF TRUSTS AND ESTATES

CLASS PROBLEMS # 3-4

3.         Assume that a "simple trust" receives $30,000 of Section 1245 income, which is allocable to fiduciary accounting income, and $20,000 of tax-exempt interest. B is a sole beneficiary. Calculate:

(a)        FAI

(b)       Gross income

(c)        TTI (taxable income without the distribution deduction)

(d)       DNI

(e)        651 deduction

(f)        TI of trust

(g)       652(a) amount

(h)       Character of 652 amount

(i)        Net taxable to B

4.         Assume that in question (3) the trust instrument allocated the $30,000 Section 1245 income to corpus rather than fiduciary accounting income.