The Raven Trust Was Terminated This Year and David, the Beneficiary

question 61

Multiple Choice

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

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

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Definitions:

Comparative Balance Sheet

Financial statements that provide a snapshot of a company's financial condition at different time points, allowing for comparison over time.

Total Assets

The complete sum of everything a company owns, both current and long-term, that can be used to produce value.

Accounts Receivable

Amounts owed to a business by its customers for goods or services delivered but not yet paid for.

Horizontal Analysis

A financial analysis technique that compares historical financial data over a sequence of reporting periods, using a base period to identify trends and growth patterns.