Which of the Following Applies to a Simple Trust

question 63

Multiple Choice

Which of the following applies to a simple trust?

• A)It is allowed a $100 deduction on its income tax return
• B)It is required to make annual charitable contributions
• C)It must distribute its accounting income to its beneficiaries annually
• D)The trustee must distribute capital gain income

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Definitions:

Regressive Income Tax

A taxation method where the tax rate falls as the amount being taxed grows.

Opportunity Cost

The cost of foregone alternatives, representing the benefits one could have received by taking a different decision.

Substitution Effect

The change in consumption patterns due to a change in relative prices, leading consumers to substitute one product for another.

Demand Curve

A curve showing the relation between the price of a good and the quantity consumers are willing and able to buy per period, other things constant.