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%.

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Definitions:

Despotic Governments

Governments characterized by an authoritarian form of rule where a single entity or a small group possess absolute power without effective constitutional limitations.

Natural Right

A philosophy asserting that individuals inherently possess rights that cannot be taken away by government or society, such as life, liberty, and property.

Pursuit of Happiness

Often associated with the US Declaration of Independence, it refers to the right of individuals to seek and attain their own version of happiness.

Property Ownership

The legal right or title to possess, use, and dispose of physical or intellectual property.