Which of the Following Is the Most Accurate Statement Concerning

question 28

Multiple Choice

Which of the following is the most accurate statement concerning the use of trusts in tax planning?

• A) Nontax reasons for the use of trusts (such as avoidance of probate) typically outweigh tax reasons for creating trusts today.
• B) The grantor trust rules allow grantors to shift income into trusts and reduce their own taxes.
• C) The large 15% tax bracket available to trusts allows complex trusts to be used as an income- shifting device.
• D) None of the above statements are correct.

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Definitions:

Mean

The arithmetic average of a set of numbers, calculated by dividing the sum of the values by the number of values.

Variance

A measure of how much values in a dataset differ from the mean, indicating the distribution's spread.

Standard Deviation

The measure of the dispersion of a set of values relative to its mean, indicating how spread out the values are.

Standard Normal Curve

A bell-shaped curve that is symmetric about the mean, representing the distribution of a standard normal variable with a mean of zero and a variance of one.