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:

Falsification

The act of disproving a hypothesis or theory by presenting evidence that contradicts it.

Trickery

The use of deceit, cunning, or manipulation to achieve a goal or influence someone's actions or beliefs.

Motivation

The process that initiates, guides, and maintains goal-oriented behaviors, driven by internal or external factors.

Persuasive Message

A communication designed to convince or influence the audience to adopt a certain viewpoint or to take a specific action.