Asignment: Jenny Justice Trust Tax Returns 2016 Forms
Marion Mosley created the Jenny Justice Trust in 2005 with First Bank named as trustee. For 20 years, the trust is to pay out all its income semiannually to the beneficiary, Jenny Justice. At the end of the twentieth year, the trust assets are to be distributed to Jenny's descendants. According to the trust instrument, capital gains are credited to principal, and depreciation is charged to principal. For the current year, the irrevocable trust reports the following results:
|
|
Amounts Allocable to
|
|
Rental income
Corporate Bond Interest
Interest on tax-exempt (non-private activity) bonds
Long-term capital gain on sale of land
Maintenance & repairs of rental property
Property taxes on rental property
CPA's fee for tax return preparation
Trustee's fee
Depreciation
Estimated federal income taxes paid from principal
|
Income
$15,000
27,000
8,000
1,500
700
500
|
Principal
11,000 a
2,000
2,400
2,000
|
a The sales price and adjusted basis are $91,000 and $80,000, respectively. The trustee acquired the land in 2006 and the trustee sold it in November of the current year.
Prepare Form 1041 including any needed Schedule K-1s for the Jenny Justice Trust. Ignore alternative minimum tax (AMT). The trustee's address is P.O. Box 100, Southwest City, TX 75000. The identification number of the trust is 74-1234567. Jenny resides at 2 Mountain View, South City, AL 35000.