Compute the Federal income tax liability for the Valerio Trust. The entity repor

Question

Compute the Federal income tax liability for the Valerio Trust. The entity reports the following transactions for the 2015 tax year. The trustee accumulates all accounting income for the year.

Carryout the tax computation to two decimal places and if required, round the final tax liability to the nearest dollar.

The Federal income tax liability for the Valerio Trust is $ ?

Operating income from a business $500,000 Dividend income, all from U.S. corporations 30,000 Interest income, City of San Antonio bonds 40,000 Fiduciary fees, deductible portion (15,000) Net rental losses, passive activity (100,000)

Explanation / Answer

operating income=$500,000

personl exemption of a complex trust=-$100

Fiduciary fees=-$15,000

Fiduciary taxable income= $584,900

According to trust tax slab

=3179.5+39.6%*(584900-12300)=$229,929.1

Dividend income tax= 15%*30000= $4,500

Total tax=234,429.1

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