A Trust Is Required to Distribute All of Its Income

question 92

Multiple Choice

A trust is required to distribute all of its income annually. It distributes all of the income and $2,000 of principal to the beneficiary. Which of the following statements is correct?

• A)The trust is a complex trust and is allowed a $300 exemption.
• B)The trust is a complex trust and is allowed a $100 exemption.
• C)The trust is a simple trust and is allowed a $300 exemption.
• D)The trust is a simple trust and is allowed a $100 exemption.

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Definitions:

Future Value

The value of a current asset at a future date based on an assumed rate of growth.

Discount Periods

The time frame in which a discount is available for early payment of an invoice or debt.

Present Value

The current value of a future sum of money or stream of cash flows, given a specified rate of return.

Capital Investments

Funds spent by a company to acquire or upgrade physical assets such as property, industrial buildings, or equipment to increase its long-term revenue.