[jeff]

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Jeff Elliott, CPA (KS)
NINJA CPA | NINJA CMA | NINJA CPE | Another71

[Tax lady]

You are correct, the answer is B.

The written trust instrument would be the starting place for creating any trust. The written trust instrument would provide for payment of fees to the trustee and designate any and all beneficiaries.

Transferring the cash to the trustee would complete the creation of the trust.

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[Mamabear]

What is the other kind. Inter vivos and….

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[Anonymous]

testamentary (after death)

[Mamabear]

intestate? or something like that? What does that mean–after death?

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[Mamabear]

Gotcha. Thanks!

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[Tax lady]

After vivos? lol I can't remember the names but I can recognize a couple of them.

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[Anonymous]

A trust has distributable net income of $14,000 and distributes $20,000 to the sole beneficiary. What amounts are taxable to the trust and to the beneficiary?

Trust Beneficiary

A. $14,000 $0

B. $0 $14,000

C. $14,000 $20,000

D. $0 $20,000

[Mamabear]

Do you want to try some S-Corp now?

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[Tax lady]

B

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[Tax lady]

Yes please. I suck at those too. I sure hope I'm not doomed.

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[Mamabear]

B–This is a total guess based on some question we had earlier about recognizing income to the extent of DNI.

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[Anonymous]

B is right – DNI is the maximum amount of income taxable to the beneficiaries. Since all of the income was distributed, the beneficiary is taxed on $14,000 and the trust has no taxable income.

[Tax lady]

Awesome.

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[Anonymous]

I can switch to S-Corps. @Tax lady – what are your thoughts?

[Tax lady]

Let's do it!

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[Author]

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