The Testa Trust Was Terminated This Year and Chip,the Beneficiary

question 130

Multiple Choice

The Testa Trust was terminated this year and Chip,the beneficiary of the corpus,received all of the trust assets.The trust reported a $10,000 net operating loss for the current tax year;this was the only tax year in which the trust operated a business.Testa has one income beneficiary,Flo.As a result of these transactions:

• A)Flo and Chip each report a $5,000 NOL on their Forms 1040.
• B)Chip claims the $10,000 NOL on his Form 1040.
• C)Flo claims the $10,000 NOL on her Form 1040.
• D)The $10,000 NOL is lost forever.

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Definitions:

Transfer Price

The price at which goods or services are sold between divisions within the same company.

Division Producing

A specialized unit within a company focused on manufacturing or outputting specific products or services.

Intermediate Product

An intermediate product refers to a good or service that is utilized in the production process of another good or service, rather than being sold directly to consumers.

Transfer Price

The price at which goods and services are sold between divisions within the same company.