CCH Learning Center

Description:
This course provides a detailed explanation of how to determine the taxable income of trusts and estates, as well as of their beneficiaries. The taxation of estates and trusts, often referred to as fiduciary taxation, is governed by the "modified conduit rule."

The "conduit rule" as applied to taxation is the idea that the entity is a mere conduit for the owners of the entity. The conduit rule is modified to the extent that the trust or estate retains some income. Application of the modified conduit rules, which can be complex, is looked at in the course.

The course examines terms and definitions, types of fiduciaries, income and deductions in respect of a decedent, other deductions allowed to trusts and estates, determining distributable net income (DNI),taxation of beneficiaries, taxation of complex trusts and trusts disregarded for income tax purposes.

Upon completion of this course, the tax professional should be able to:

• Determine taxable income for trusts, estates, and their beneficiaries.

• Describe what constitutes simple trusts, complex trusts, and estates.

• Recognize which items are income, deductions, and credits in respect of a decedent.

• Demonstrate how to compute distributable net income (DNI).

• Calculate the amount of DNI that may be deducted as a distribution deduction.

• Describe the income tax consequences of a distribution by a simple trust to income beneficiaries.

• Calculate DNI and the distribution deduction for complex trusts.

• List the criteria that govern whether a trust is disregarded for income tax purposes.