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

Ordinary income (operating income) 500000 Net passive loss (rental loss) 0 Personal exemption -100 Deductible fees (fiduciary fees) -15000 Fiduciary taxable income taxed at ordinary rates 484900 income tax on on 484900 =3179.5 +(39.6%*(484900-12300)) 190329.1 Tax on dividend income (30000*15%) 4500 Total tax 194829.1

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