Form 1041: Income Taxation of Estates and Trusts

Chapter 1 1-1

What is a Trust? What is an Estate? 1-1

What is a trust? 1-2

Decedent’s estates 1-15

Chapter 2 2-1

The Fundamentals of Fiduciary Accounting 2-1

Fiduciary accounting under the UPAIA 2-4

Distinguishing income from principal under the UPAIA 2-5

The allocation of disbursements 2-15

Practice exercise 2-1 2-25

Chapter 3 3-1

Taxation of Trusts and Decedent’s Estates: An Overview 3-1

Introduction 3-2

Defining passive income 3-9

Accounting periods 3-11

Section 645 election 3-12

Accounting methods 3-13

Estimated tax 3-14

Tax identification number 3-16

Chapter 4 4-1

Gross Income for Trusts and Decedent’s Estates 4-1

Items to include 4-3

Treatment of property distributed in-kind 4-6

Chapter 5 5-1

Ordinary Deductions and Credits 5-1

Trade or business expense 5-2

Income-producing activities 5-3

Interest 5-4

Taxes 5-6

Losses and bad debts 5-7

Depreciation, amortization, and depletion 5-10

Deductions and credits in respect of a decedent: Section 691(b) 5-13

Deduction for estate taxes paid: Section 691(c) 5-14

Deductions that may be allowable for estate tax purposes 5-15

Qualified business income deduction for trusts and estates 5-16

Charitable contribution deductions 5-17

Suspension of miscellaneous itemized deductions subject to the two-percent floor 5-20

Deduction in lieu of exemption 5-21

Tax credits 5-22

Chapter 6 6-1

The Income Distribution Deduction 6-1

Defining DNI 6-2

Distinguishing simple trusts from complex trusts 6-4

Section 651(a): Deduction for distributions to beneficiaries of a simple trust 6-5

Section 661(a): Deduction for distributions of complex trusts and decedent’s estates 6-9

Practice exercises 6-14

Chapter 7 7-1

How Beneficiaries are Taxed 7-1

The taxation of a simple trust beneficiary 7-2

The taxation of complex trust and estate beneficiaries 7-7

Practice exercises 7-13

Chapter 8 8-1

Special Rules Round-Up 8-1

Unused deductions passed through to beneficiaries upon termination of an estate or trust 8-2

The throwback rules 8-3

Special rules applicable to Sections 661 and 662 8-5

Practice exercise 8-1 8-10

Chapter 9 9-1

The Tax Treatment of Grantor Trusts 9-1

When is a grantor treated as an owner? 9-3

Reversionary interests 9-7

Power to control beneficial enjoyment 9-9

Retention of administrative powers 9-13

Power to revoke 9-15

Income for benefit of grantor 9-16

Person other than grantor treated as substantial owner 9-18

Foreign trusts having one or more U.S. beneficiaries 9-19

Chapter 10 10-1

Taxation of Special Trusts 10-1

Pooled income funds 10-2

Electing small business trusts 10-5

Bankruptcy estates 10-11

Special rule for certain revocable trusts: Section 645 10-14

Chapter 11 11-1

Filing Form 1041: U.S. Income Tax Return for Estates and Trusts 11-1

Who must file 11-2

Method of reporting for grantor trusts 11-4

Pooled income funds 11-7

Electing small business trust 11-8

Bankruptcy estate 11-10

Other types of trusts 11-12

When to file 11-13

Who must sign 11-14

Interest and penalties 11-15

Appendix A A-1

Form 1041: U.S. Income Tax Return for Estates and Trusts A-1

Glossary Glossary 1

Index Index 1

Solutions Solutions 1

Chapter 1 Solutions 1

Chapter 2 Solutions 3

Chapter 3 Solutions 6

Chapter 4 Solutions 7

Chapter 5 Solutions 8

Chapter 6 Solutions 9

Chapter 7 Solutions 18

Chapter 8 Solutions 21

Chapter 9 Solutions 23

Chapter 10 Solutions 25

Chapter 11 Solutions 26