Estate Planning Ch. 19-23

All the following statements concerning estates and trusts are correct EXCEPT (A) The personal representative of an estate and a trustee have similar fiduciary responsibilities. (B) Both estates and trusts come into being by operation of law. (C) Both estates and complex trusts are separate taxpaying entities. (D) A corporate entity may act as an executor of an estate and as a trustee.

B. Both estates and trusts come into being by operation of law.

Income earned but unpaid at the time of a decedent's death is deemed to be income in respect of a decedent (IRD). Which of the following statements concerning IRD is correct? (A) The income must be reported on the decedent's final federal income tax return. (B) The income is taxable to the person or entity receiving it. (C) IRD includes income earned by the executor on estate assets. (D) The character of the income as taxable or nontaxable is changed when passed to the recipient.

B. The income is taxable to the person or entity receiving it.

All the following statements concerning the federal income taxation of estates are correct EXCEPT (A) An estate is taxed on accumulated income. (B) An estate is allowed a tax deduction for reasonable expenses. (C) An estate is taxed at a flat income tax rate. (D) An estate is entitled to a tax deduction for amounts of income distributed

C. An estate is taxed at a flat income tax rate.

All the following statements concerning income taxation of estates and trusts are correct EXCEPT (A) An estate is a separate taxpaying entity. (B) A complex trust is a separate taxpaying entity. (C) Income distributed by a trust to an income beneficiary of the trust is taxable to the trust. (D) The executor or administrator of an estate is responsible for filing an income tax return.

C. Income distributed by a trust to an income beneficiary of the trust is taxable to the trust.

Which of the following statements concerning income taxation of trusts and estates is correct? (A) A simple trust is allowed an exemption of $500. (B) A complex trust is allowed an exemption of $1,000. (C) An estate is taxed the same as a grantor trust. (D) An estate is allowed an exemption of $600.

D. An estate is allowed an exemption of $600.

A decedent's final tax year generally ends on December 31 of the year in which the decedent dies.

False

Although a trust is a private arrangement, it is supervised by the court until its termination

False

The term skip beneficiary pertains to individuals and is therefore limited to nontrust transfers for GSTT purposes

False