ACCT 580- Advanced Taxation

Research Exercise #1: Income Taxation of Estates & Trusts

Instructions:

To complete this assignment, you need to use the CCH Tax Research Network, available on  the CWU Library network:

  1. You must be logged into the CWU network (click here for help).

  2. You should click on this link to the CCH tax service with your right mouse button and have the CCH service open in a new window. Then you can use the service to find the answers and the form below to submit your answers.

  3. To use the CCH Tax Research Network to answer these questions:

    -Click on the Enter button on the first web page  
    -Click on the Federal tab on the main page of the CCH Tax Research Network  
    -Select the appropriate CCH features/resources for the exercise.  

Purpose:

The purpose of this exercise is to introduce you to the use of CCH for the purpose of finding and interpreting:

  1. The sections of the Internal Revenue Code (IRC) that authorize the imposition of U.S. income tax on estates and trusts.

  2. A court case in which a taxpayer's compliance with those sections is subjected to adjudication.

 

Last Name:  

 First Name:  

 

CCH Search Section Question: Enter your answer:
Current Internal Revenue Code
1. Identify the subchapter of the IRC under which §1 is located?
2. Who are the taxpayers covered by Internal Revenue Code  (IRC) §1(e)?
3. What do the taxpayers have to pay tax on under IRC §1(e)? (In other words, what is included in a taxpayer's tax base?)
4. What is the highest marginal tax rate under IRC §1(e) in the case of tax periods that begin in 2003 and thereafter?
5.  At what level of the tax base does the highest marginal tax rate under IRC §1(e) go into effect?
6. Identify the subchapter and part under which IRC §651 is located.
7. What is the title of IRC §651?
8. Under §651, how much is a simple trust allowed to deduct?
Find by Citation Find and refer to the case at 47-1 USTC ¶9131

Facts

 9. List the taxpayers (plaintiffs) involved in this case.
10. List the tax accounting periods that are being examined.
11. Identify the method of accounting used by the taxpayers. Cash
Accrual		 Hybrid
Unspecified
12. List the components & amounts of the tax base that are in dispute.

Issues

 13. What was the issue related to §22 of the 1939 IRC in this case?
14. What was the grantor's "idea and intention" in creating this trust?
15. Briefly explain what the taxpayers accomplished from a tax planning perspective, by establishing this trust.

Conclusion
(Judicial Ruling)

 16. According to the Court, was the trust valid and why or why not?

Planning Alternative

 17. How could the taxpayers have changed the provisions in the agreement to avoid the dispute with the IRS?

    
When you select Submit, your answers will be submitted to a database for grading by me.
The confirmation page that opens will be the only confirmation that you receive.

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Ronald R. Tidd, Ph.D., CPA
509.963.2466
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