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Trusts and estates: Form 1041

SEE 2 Chapter 21 · IRS outline 3A1, 3A2, 3A3, 3A4, 3A5, 3A6, 3A7

Hank Mueller, Theo's retired client from Part 1, set up two trusts years ago, one for grandchildren's schooling and another that holds his rental. His sister Ruth is the trustee and arrives at Lantern Street with a folder and a question: 'Do these pay tax, or do I?'. At the same time, a stranger offers Walt a 'business trust' that promises to wipe out his income tax. Nadia pulls a chair out for Ruth, and picks up the phone to warn Walt.

In this chapter

1. Types of trusts
2. Income and corpus
3. Distributable net income
4. Exclusions, exemptions and deductions
5. What goes on the K-1
6. Filing, tax years and penalties
7. Abusive and fraudulent trusts

This chapter has 7 lessons and 63 practice MCQs with explanations, plus flashcards and a recall sheet.

What this chapter covers

• Simple, complex, grantor and foreign trusts
• income and corpus
• DNI and the distribution deduction
• exemptions and deductions
• the K-1
• filing and penalties
• abusive trusts

Chapter 20: Advising the business taxpayer · Chapter 22: Exempt organizations