A Complex Trust (Not Required to Distribute Any Income) Generated

question 22

Multiple Choice

A complex trust (not required to distribute any income) generated a long- term capital loss of $100,000 in 2012. It had taxable income of $100,000 from domestic dividends in 2012. The trust terminated in 2012. What is the tax treatment of the capital loss to the remainderman beneficiary (who has no capital gains in 2012) ?

• A) Deduction of $100,000
• B) Deduction of $3,000 and no carryover
• C) Deduction of $3,000 and carryover of $97,000
• D) Deduction of $6,000 and carryover of $94,000

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Definitions:

Phenotypic Plasticity

The capacity of a living entity to alter its physical characteristics as a reaction to varying environmental conditions.

Genetic Engineering

A field of biotechnology that involves directly manipulating the genes of organisms to modify or improve specific characteristics or produce desired products.

Dominant Genes

Genes that express their trait even when only one copy is present, overpowering recessive genes in determining certain characteristics.

Recessive Genes

Genes that produce their characteristic phenotype only when their allele is identical and not masked by a dominant allele in a heterozygous pairing.