In 2012,Paul Transfers $1,000,000 to a Trust Benefiting His Three

question 79

Multiple Choice

In 2012,Paul transfers $1,000,000 to a trust benefiting his three children.As trustee,he has the power to determine the amount of distributions each year.Paul dies in the current year when the trust has a value of $1,200,000.How much of the trust's value is included in Paul's estate?

• A)$0
• B)$400,000
• C)$1,000,000
• D)$1,200,000

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Definitions:

Taxable Income

Taxable income is the portion of an individual's or a company's income used to determine how much tax they owe to the government in a given tax year.

Single Individual

Pertains to one person or entity, distinguishing from groups or multiple entities.

Marginal Tax Rate

The percentage rate at which your final dollar of earnings is taxed, denoting the tax percentage applied to your income within each tax bracket you fall into.

Regressive Tax System

A tax system where the tax rate decreases as the taxable amount increases, placing a higher burden on lower-income individuals.