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GiftLaw Pro Home   >  Chapter 3 - Deferred Gifts  >  3.5 Lead Trust  >  3.5.7 Lead Trust Income Taxation  >  Basic Quiz

Basic Quiz - 3.5.7 Lead Trust Income Taxation

1. A lead trust can be a grantor lead trust or a non-grantor lead trust.
           
2. With a grantor lead trust, the trust income is taxable to the donor. However, the payments made to charity are not taxable to the donor.
           
3. If the trust is a non-grantor lead trust, the trust itself is the taxable entity.
           
4. Because a lead trust is a taxable trust, it does not matter if there is unrelated business taxable income in the trust.
           
5. Securities are good assets for funding living lead trusts.
           
6. It is desirable to sell highly appreciated assets within a living lead trust and invest in a diversified portfolio.
           
7. Any appreciation in the assets held by the non-grantor lead trust is passed to family at the end of the trust without any further gift or estate tax.
           
8. Typically, the payment frequency from a lead trust is annual.
           
9. If the lead trust is established during the life of the donor, the assets transferred to the lead trust receive a step up in basis.
           
10. With a testamentary lead trust, assets can be sold and the trust can diversify without any of the trust principal being lost to capital gains tax.