Jim created a trust which holds the deeds to two rental properties. His two children will receive all income from the trust while Jim is alive and will continue to receive this income after Jims death. A separate trustee receives all rental payments and is responsible for making any required payments for the two properties. The trust receives $100,000 in rent payments and $1,000 in interest held in an account used for required payments. The trust paid $10,000 in mortgage interest and $15,000 in property taxes during the year. Which item (s) will be reported on Jims Form 1040 and which will be reported on the trusts Form 1041?

a) All items indicated will be reported on the trusts Form 1041.

b) The interest of $1,000 will be reported on Jims Form 1040.

c) Jim will take the deductions for mortgage interest ($10,000) and property taxes ($15,000) on his Form 1040.

d) The trust will report everything except the $1,000 of interest on its Form 1041.

The Herman Hooper Trust made qualified charitable contributions on January 28 of 2022 from income earned in 2021 of $4,000. This contribution was made to a charity created and organized in Canada. The trust then made another contribution on January 29, 2022, of $4,400 from income earned in 2021 to a U.S. based charity. The trustee then made a tax year election for charitable purposes by attaching a statement to Form 1041 for tax year 2021. How would these deductions be taken in 2021 and 2022 by the trust and by Herman?

a) Trust: (2021) $0 and (2022) $4,400; Herman: $0

b) Trust: (2021) $4,000 and (2022) $4,400; Herman: $0

c) Trust: (2021) $8,400 and (2022) $0; Herman: $0

d) Trust: (2022) $0; Herman: $8,400 40.

Tom is researching the IRS rules and regulations concerning taxation of trusts. He is unclear concerning the application of trust tax rates to various elements of trust income. Which of the following statements is correct?

a) All trust income will be taxable to the trust before being distributed to beneficiaries.

b) Capital gains will be taxable to the trust.

c) Interest income and dividend income will be taxable to the trust before being distributed to beneficiaries.

d) Income which is distributable to beneficiaries will be deducted from trust income before applying the trusts tax rate to trust income.