Which of the Following Is the Most Accurate Statement Concerning

question 81

Multiple Choice

Which of the following is the most accurate statement concerning the use of trusts in tax planning?

• A)The grantor trust rules allow grantors to shift income into trusts and reduce their own taxes.
• B)Nontax reasons for the use of trusts (such as avoidance of probate)typically outweigh tax reasons for creating trusts today.
• C)The large 15% tax bracket available to trusts allows complex trusts to be used as an income-shifting device.
• D)None of the above statements are correct.

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Definitions:

Avoidance-Avoidance Conflict

A psychological situation involving a choice between two negative or undesirable options.

Risk-Aversion Conflict

The psychological struggle or decision-making dilemma faced when avoiding risk leads to potential gains being missed or minimized.

Approach-Approach Conflict

A decision-making dilemma involving two positive options, where choosing one desirable alternative means losing another equally desirable one.

Approach-Approach Conflict

A psychological dilemma that occurs when an individual must choose between two desirable outcomes.