Which of the following applies to a testamentary trust that is designated as a graduated rate estate (GRE)?
A)Tax installments are required.
B)A non-calendar year may be used for tax purposes.
C)The highest rate of tax will apply to all income.
D)The GRE will become a normal testamentary trust after 48 months.

Question

Quizplus · Accepted Answer

A GRE can have a non-calendar year for tax purposes, which means it can have a taxation period that is not from January to December. This can be advantageous for tax planning purposes.

Answer: D 
 A GRE status is only available for the first 36 months after the individual's death. After that, it reverts to a regular testamentary trust and is no longer eligible for GRE tax treatment. This means that the answer (D) is incorrect, as the timeframe listed is 48 months, which is longer than the 36-month period for GRE status.

Therefore, the correct answer is B.

Which of the Following Applies to a Testamentary Trust That