Estates and trusts can receive a deduction for administrative expenses not otherwise deducted on the estate tax return (Form 706). They are not taxed on state and municipal bond interest and do not receive a $1,000 personal exemption. While estates and trusts are generally subject to capital gains tax, there are certain circumstances where they may be exempt or subject to a lower rate.

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Estates and Trusts

Question 28

Multiple Choice

Estates and trusts

A) receive a deduction for administrative expenses not otherwise deducted on the estate tax return (Form 706) .
B) are taxed on state and municipal bond interest.
C) are not taxed on capital gains.
D) receive a $1,000 personal exemption.

Correct Answer: