Question

A fiduciary (personal representative or trustee) may incur personal liability for income tax due from a decedent if

a.by paying the decedent’s creditors before satisfying debts due the United States.

b.by refusing to serve as fiduciary when properly named or appointed.

c.by understating, by more than 25%, the decedent’s income on the decedent’s final 1040.

d.by understating, by more than 20%,the decedent’s income on the decedent’s final 1040.

Answer 1

"Failure to report income. If you or the decedent failed to report substantial amounts of gross income (more than 25% of the gross income reported on the return) or filed a false or fraudulent return, your request for prompt assessment won't shorten the period during which the IRS may assess the additional tax. However, such a request may relieve you of personal liability for the tax if you didn't have knowledge of the unpaid tax." IRS.

So, Answer is C) understating more than 25% of the decendents income will impose personal liability.

In other options , one can pay administrative debts and then legitimate debts, or he can withdraw to serve as a representative.