Karly Created a $300,000 Trust That Provided Her Mother with a Lifetime

question 6

Multiple Choice

Karly created a $300,000 trust that provided her mother with a lifetime income interest starting on January 1, with the remainder to go to her son. Karly expressly retained the power to revoke both the income and remainder interests at any time. Who will be taxed on the trust's income?

• A) Karly's mother
• B) the trust
• C) Karly
• D) Karly's son

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Definitions:

Market Equilibrium

A situation where, at the current price, the quantity of goods supplied equals the quantity of goods demanded, leading to a stable market condition.

Optimal Allocation

The most efficient distribution of resources and services, maximizing the benefit from their use.

External Costs

Costs not reflected in the market price of goods or services, borne by a third party or society at large.

Competitive Market

A market structure characterized by a large number of buyers and sellers, where no single entity can significantly influence prices or market conditions.