In: Accounting
Exercise 28-12 (Algorithmic) (LO. 1) The entity reports the following transactions for the 2019 tax year. The trustee accumulates all accounting income for the year.
Operating income from a business $845,000
Dividend income, all from U.S. corporations 50,700
Interest income, City of San Antonio bonds 6,760,000
Fiduciary fees, deductible portion (25,350)
Net rental losses, passive activity (169,000)
have to access tax table for this problem. Carryout the tax computations to two decimal places and round the final tax liability to the nearest dollar. Compute the Federal income tax liability for the Valerio Trust by providing the following amounts:
The amount of the fiduciary's gross income taxed at 20% for the Valerio Trust is $. 50,700
The fiduciary taxable income taxed at ordinary rates for the Valerio Trust is $. ?
The Federal income tax liability for the Valerio Trust is $.?
1) According to the provisions of "Estimated Income Tax for Estates and Trusts" for the year 2019 the fiduciary income taxed at a nominal rate of 20% for the Valerio Trust is equal to the dividend income for the Year, which is equal to $50,700. | |
2) | |
Ordinary income (operating income) | |
Net passive loss (rental loss) | $845,000 |
Personal exemption of a complex trust | -$100 |
Deductible fees (fiduciary fees) | -$25,350 |
Fiduciary taxable income taxed at ordinary rates (c) | $819,550 |
3) | |
2019 income tax on $819,550 | |
$3,075.50 + (37% x $819,550 - $12,750) | $301,592 |
Tax on dividend income ($50,700 × 20)% (a) | $10,140 |
Total tax liability | $311,732 |