Sally Transfers Property to a Revocable Trust

question 98

Multiple Choice

Sally transfers property to a revocable trust. Under the terms of the trust agreement, Allison is to receive income for ten years at which time the remainder is to go to Tom. During the year, the trust earns $10,000 in corporate bond interest income and recognizes a capital gain of $20,000. The interest is distributed to Allison and the capital gain is properly allocated to principal. Allison (not Sally) will pay tax on

• A)$0.
• B)$10,000.
• C)$20,000.
• D)$30,000.

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Definitions:

Iron Law

Refers to the principle of "iron law of oligarchy," which posits that all forms of organization, regardless of how democratic they are at the start, will eventually and inevitably develop oligarchic tendencies.

Responsibility

The state or fact of having a duty to deal with something or of having control over someone.

Organizational Behavior

Organizational behavior is the study of individuals and groups in organizations.

Interchangeable Terms

Phrases or words that can be used in place of each other due to their similar meanings within specific contexts.