Question

Which statement is false with respect to the income taxation of an estate?

a. The estate likely receives amounts of income in respect of a decedent immediately upon the decedent's death.

b. The estate is a tax-reporting, not a tax-paying, entity.

c. The estate may need to make estimated tax payments.

d. The IRS will look to terminate the estate if it determines that the entity is being kept open simply to avoid income tax liabilities.

Answer 1

The correct answer is OPTION B i.e The estate is a tax-reporting, not a tax-paying, entity.

The statement which is false with respect to the income taxation of an estate is that "The estate is a tax-reporting, not a tax-paying, entity".

Explanation

The taxation of an estate is done accordingly as prescribed by IRS (Internal Revenue Service).

IRS prescribes in case of estate incomes taxation, the following points are true :

• The estate likely receives amounts of income in respect of a decedent immediately upon the decedent's death.

• The estate likely receives amounts of income in respect of a decedent immediately upon the decedent's death.

• The IRS will look to terminate the estate if it determines that the entity is being kept open simply to avoid income tax liabilities.

Also, the estate is a tax-reporting, not a tax-paying, entity is a false.