1.Generally, in a grantor trust,

a.the tax liability is paid by either the trustee or its beneficiaries

b.the grantor does not retain significant control over the trust

c.the grantor is responsible for income tax on income from the trust property

d.probate is not avoided

2.In the case of a non-grantor trust,

a.the trust assets are ignored for income tax purposes

b.the trust is treated as a separate taxable entity

c.the grantor retains significant control over its assets

d.the property is pulled back into the grantor's estate

3.All of the following are powers that if held by the grantor lead to grantor trust status except:

a.power to add to the corpus

b.power to revoke

c.administrative powers

d.reversionary interests

4.Which of the following statements concerning a grantor trust is/are true?

(1)grantor trusts can reduce the cost, delay, and publicity of probate

(2)income from a grantor trust is taxed to the grantor

(3)grantor trusts avoid estate tax

(4)grantor trusts incur gift tax

a.(1) only

b.(1) and (2) only

c.(2) and (3) only

d.(4) only

5.The personal tax exemption for a simple trust is $_____, and the exemption for most complex trusts is $_____.

a.$500; $250

b.$300; $100

c.$250, $300

d.$200, $500

6.Which of the following statements about a simple trust is true?

a.it permits charitable contributions

b.it permits distribution of corpus

c.it distributes all trust income annually

d.the trustee has discretion whether to accumulate or distribute trust income

7.When a trust distributes property and the trustee elects to report the gain at the trust level:

a.the trust does not receive a distribution deduction

b.the beneficiary does not report gain in income in the year received

c.the beneficiary gets a carryover basis

d.the gain is calculated as if the trust sold the property to the beneficiary

8.Which of the following statements about simple and complex trusts are true?

(1)a trust that distributes income from a prior year is a complex trust

(2)simple and complex trusts receive the same personal tax exemption

(3)once a trust is a complex trust, it is a complex trust for all tax years

(4)only a complex trust may make charitable contributions

a.(1) only

b.(2) only

c.(1) and (4) only

d.(2) and (3) only

9.All of the following are true about Distributable Net Income (DNI) EXCEPT:

a.DNI prevents trust income from being taxed twice

b.the character of DNI carries over to the beneficiaries

c.DNI is deducted from the gross income of the trust

d.DNI is tax exempt to the beneficiaries

10.All of the following are examples of IRD income EXCEPT:

a.Bonuses

b.Employee stock options

c.Retirement plan distributions

d.Live insurance death benefits