Determine Taxation Of Trusts And Estates Practice Test

Income distributed to beneficiaries is deducted by the trust or estate (distribution deduction) and taxed to the beneficiaries; income retained by the entity is taxed at the entity level.

All income of a trust or estate is taxed at the entity level and never passed through to beneficiaries.

All income of a trust or estate is passed through to beneficiaries and never taxed at the entity level.

Income is always split equally between the entity and the beneficiaries.