Which of the Following Statements Regarding the Taxation of a Trust

question 101

Multiple Choice

Which of the following statements regarding the taxation of a trust is incorrect?

• A)An irrevocable trust's income is taxed to the grantor.
• B)Trusts are generally not taxed at favorable rates for income shifting.
• C)Trusts are not subject to double taxation.
• D)A trust's long-term capital gains are taxed at a top rate of 15%.

---

Definitions:

Process Costing

A costing method used for homogeneous products, where costs are accumulated over a period and assigned to large numbers of identical units.

Cost Per Equivalent Unit

A calculation used in process costing that determines the cost associated with a single unit of output, adjusting for partial completion of units in the production process.

Materials Cost

The cost of raw materials used to produce goods.

Process Costing

A method of costing that is used in industries where production is continuous and the product is indistinguishable from unit to unit.