Which of the following statements is incorrect?
a. The taxation of trusts and estates is governed by Subchapter J of the Internal Revenue Code.
b. Form 1041 illustrates the conduit theory of income taxation since all taxable income received by a trust or estate is taxed to the beneficiaries.
c. Form 1041 is an income tax return for most types of trusts and decedents estates.
d. The income tax rates applied to trusts and estates are highly compressed compared to income tax rates for individuals.
Trusts basically mean that a property of someone is managed by someone else, not for the benefit of either of the above-mentioned parties but for the benefit of a third party who is/are called the beneficiary/ beneficiaries of the trust.
Answer and Explanation: 1
Option D is the correct answer
The income tax rates applied to trusts are not compressed (10% to 37%). On the contrary, the tax brackets are...
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fromChapter 5 / Lesson 9
Learn about tax structures and see how they work. Explore three types of tax structures, including regressive tax, progressive tax, and proportional tax structures.