G created an irrevocable trust, with ordinary income to G for life, remainder to B, an unrelated person. Except for the right to receive income, G did not retain any powers that would cause him to be treated as the owner under IRC sections 671 and 677. Local law requires capital gains to be applied to corpus. The trust had the following items of gross income and deductions for the current year:

Dividends $5,000

Capital Gains $1,000

Expense allocable to income $200

Expense allocable to corpus $100

a) What are the tax consequences to the trust of the transactions described above?

b) What are the tax consequences to the grantor of the transactions described above?

c) What are the tax consequences to the trust's beneficiaries of the transactions described above?

This Question is from Taxation for Estates and Trusts, there is no other classification I can put this question in. Tax is a part of accounting

Answer rating: 100% (QA)

a According to section 677 G has a right to receive income and he will be treated as an owner of a p... View the full answer