Which of the following statements is TRUE regarding trusts?
A)Losses that exceed income in a trust are allocated to the beneficiary at the end of the year.
B)The allocation of income from a trust is discretionary.
C)Income that is payable to a beneficiary cannot be deducted from the trust's income.
D)The residence of a trust is determined by the residence of the trustees.

Question

Quizplus · Accepted Answer

The allocation of income from a trust is discretionary, meaning the trustee has the authority to determine how much income, if any, is distributed to beneficiaries. A is incorrect because losses are not allocated to beneficiaries; they are generally retained in the trust and carried forward to offset future income. C is incorrect because income payable to a beneficiary is deducted from the trust's income before determining the taxable income of the trust. D is incorrect because the residence of a trust is determined by the state in which the trust is created, not by the residence of the trustees.

Which of the Following Statements Is TRUE Regarding Trusts