Ea Business: Ch 16 Specialized Returns

Front 1

What is a simple trust?

Back 1

A simple trust is one that is required to distribute all income currently

Front 2

What is corpus?

Back 2

trust principal

Front 3

What is the distribution deduction?

Back 3

portion of distribution that the TRUST may deduct

Front 4

How is income from a grantor trust treated?

Back 4

treated as if NO trust existed

Front 5

Estate exemption deduction on 1041?

Back 5

$600 - simple

$100 - complex

Front 6

3 requirements to be a Simple Trust?

Back 6

A trust may qualify as a simple trust if:

1. The trust instrument requires that all income must be distributed currently,

2. The trust instrument does not provide that any amounts are to be paid, permanently set aside, or used for charitable purposes, and

3. The trust does not distribute amounts allocated to the corpus of the trust.

Front 7

Farming income: where to report - Farmproducts raised for SALE, like crops and livestock

Back 7

Schedule F

Front 8

Farming income: where to report - a. Farm products bought for RESALE, like crops andlivestock

Back 8

Schedule F

Front 9

Farming income: where to report - a. Farm products NOT held for resale – such aslivestock (bought or raised)

Back 9

Form 4797

Front 10

What is the basis of raised livestock?

Back 10

$0

Front 11

Conditions to postpone reporting the gain?

Back 11

a. Principal trade is farming

b. Use CASH method of accounting

c. Can show would have sold animals but for weather

d. Weather-related condition CAUSED the fed govt to designate an area as eligible for assistance

Front 12

Postponereporting crop insurance proceeds as income under 3 conditions

Back 12

a. CASH method of accounting

b. Received crop insurance proceeds in the SAME taxyear as the year the crops are damaged

c. Under normal business practices, they would haveincluded income from the damaged crops in any tax year following the year thedamage occurred

Front 13

Income Averaging for Farmers -

Who can income average?

Back 13

a. 3 prior years

b. Who CANNOT use income averaging? Corps,partnership, S Corps, estates, trusts

Front 14

Estimated Taxes for Farmers - Whodoes NOT need to pay estimated taxes?

Back 14

a. Taxpayer with at least 2/3 of income fromfarming

b. Pay entire tax liability by March 1 followingthe tax year

Front 15

Sale or exchange of livestock is considered what type of loss?

Back 15

Section 1231

Front 16

How do farmers pay estimated taxes?

Back 16

a. One estimated tax payment by January 15thequal to the LESSER of: i. 66 2/3% of tax due ii. 100% of prior year tax liability

Front 17

The Final Return - Survivingspouse with no income?

Back 17

1) Can be claimed on return BOTH of decedent andthe return of the new spouse for the year

Front 18

The Final Return - what income to include - CASH method

Back 18

actuallyor constructively received before death

Front 19

The Final Return - what income to include - ACCRUAL method

Back 19

report income when earned

Front 20

The Final Return - medical expense deduction ?

Back 20

Only if PAID before death

Front 21

The Final Return - medical expense deduction (paid after death)

Back 21

1) Liabilities of the estate – federal estate return(Form 706)

a. Estate may elect to treat the expenses as paidwhen incurred

b. Bottom line: Estate return 706 OR itemizeddeduction on income tax return

Front 22

The Final Return - coupon on bonds?

Back 22

when MATURED

Front 23

The Final Return - dividends

Back 23

when RECEIVED

Front 24

How are Agricultural Program Payments treated?

Back 24

Farm Income, SUBJECT to SE tax