Which of the Following Applies to a Simple Trust

question 101

Multiple Choice

Which of the following applies to a simple trust?

• A)It has a $100 personal exemption 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:

Parent

A term used to refer to a company that owns more than half of another company, making the latter a subsidiary.

Subsidiary Companies

These are companies that are controlled by another company, known as the parent company, through ownership of more than half of their voting stock.

Stock Investments Account

An account that records the cost of stocks that have been purchased as investments by a company.

Dividends Received

Income received from shares in a company, typically distributed from profits to shareholders as decided by the board of directors.