true or false 9. When income is taxable to the grantor trust rules, the attorney who...
true or false
9. When income is taxable to the grantor trust rules, the attorney who drafted the trust definitely made a mistake.
10. Which of the following is not a tax consequence associated with a defective trust?
a. The income tax is shared by the trust and the trust beneficiaries.
b. The Grantor is subject to income tax.
c. For gift tax purposes, a gift into this trust is complete.
d. The trust assets are removed from the Grantor’s estate
Homework Answers
9. True
Income of a Grantor trust is liable to taxed in the hands of grantor not on the grantor trust.
10.a. The income tax is shared by the trust and the trust beneficiaries.
As it is a grantor trust, the grantor will be responsible for paying income taxes on the trust’s activity.
Income tax is not shared by trust and the trust beneficiaries.
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