43. a. c. Trusts can be treated as separate tax entities or as conduits through which income is passed to the beneficiaries. Income generally will be taxed in each of the following ways EXCEPT Income is taxable to the trust if it is accumulated by the trust. b. Income is taxable to the beneficiaries to the extent the trust distributes or makes it available to them. Income can be distributed in part to the beneficiaries with the balance accumulated, and the distributed portion is taxable to the beneficiaries and the accumulated portion is taxable to the trust. d. Income is taxable to the trust or to the beneficiaries in accordance with the trustee's election. It is often desirable to keep life insurance death proceeds out of the insured's estate for tax reasons. Which of the following describe(s) a necessary requirement to keep the proceeds out of the insured's gross estate? 1. The insured must not possess any incidents of ownership. 2. The transfer of incidents of ownership must occur more than 3 years prior to death 3. The insured cannot continue to pay premiums on the policy. 44. a. b. c. d. 1 only 2 only 1 and 2 only All of the above 45. Which of the following rights retained by a donor who gifts property during his or her lifetime will result in the inclusion of such property in the gross estate of the donor- decedent? 1. The right to the property's income for the donor's lifetime. 2. The right to revoke the transfer in case of financial need. 3. The right to designate persons who can possess or enjoy the property or income. a. b. c. d. e. 1 only 1 and 2 only 2 and 3 only All of the above None of the above 43. a. c. Trusts can be treated as separate tax entities or as conduits through which income is passed to the beneficiaries. Income generally will be taxed in each of the following ways EXCEPT Income is taxable to the trust if it is accumulated by the trust. b. Income is taxable to the beneficiaries to the extent the trust distributes or makes it available to them. Income can be distributed in part to the beneficiaries with the balance accumulated, and the distributed portion is taxable to the beneficiaries and the accumulated portion is taxable to the trust. d. Income is taxable to the trust or to the beneficiaries in accordance with the trustee's election. It is often desirable to keep life insurance death proceeds out of the insured's estate for tax reasons. Which of the following describe(s) a necessary requirement to keep the proceeds out of the insured's gross estate? 1. The insured must not possess any incidents of ownership. 2. The transfer of incidents of ownership must occur more than 3 years prior to death 3. The insured cannot continue to pay premiums on the policy. 44. a. b. c. d. 1 only 2 only 1 and 2 only All of the above 45. Which of the following rights retained by a donor who gifts property during his or her lifetime will result in the inclusion of such property in the gross estate of the donor- decedent? 1. The right to the property's income for the donor's lifetime. 2. The right to revoke the transfer in case of financial need. 3. The right to designate persons who can possess or enjoy the property or income. a. b. c. d. e. 1 only 1 and 2 only 2 and 3 only All of the above None of the above