Reference no: EM133183766
Question - This is the third and final tax return that you will be preparing in this course. This third return will assess your ability to properly prepare a fiduciary income tax return for a trust. Prepare the 2016 fiduciary income tax return (Form 1041) for the Lawrence Trust. In addition, determine the amount and character of the income and expense items that each beneficiary must report for the year, and prepare a Schedule K-1 for David Lawrence. Omit all alternative minimum tax computations. The year's activities of the trust include the following.
Dividend income, all U.S. stocks $50,000
Taxable interest income 10,000
Tax-exempt interest income 15,000
Fiduciary's fees 4,000
The trust and David both use the calendar tax year. Under the terms of the trust instrument, fiduciary's fees are allocated to income. The trustee must distribute all of the entity's accounting income to David Lawrence by February 15 of the following year. The trustee followed this charge and made no other distributions during the year. Fiduciary's fees properly were assigned as an offset to taxable interest income.
The trust was created on March 19, 2000. There are no tax credits for the year, and none of the entity's income was derived from a personal services contract. The trust has no economic interest in any foreign trust. Its Federal identification number is 11-1111111.
The trustee, Johnson State Federal Bank, is located at 9594 President Road, Manhattan, NV 89022. Its employer identification number is 98-3456789. David lives at 17676 Gulch Road, Hawthorne, NV 89415. His Social Security number is 987-65-4321.
Required - Prepare an income tax return for estates and trusts (Form 1041) for Lawrence Trust. A fill-in 2016 1041 PDF form (including the Schedule K-1) can be found in Assignment Instructions.
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