Which Type of Trust Requires That Income Generated from Its

question 58

Multiple Choice

Which type of trust requires that income generated from its assets be recognized, for federal income tax purposes, by the grantor during his or her lifetime, and reported in his or her individual income tax return?

• A) Inter vivos trust.
• B) Grantor trust.
• C) Revocable living trust.
• D) Family trust.
• E) Irrevocable life insurance trust.

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Definitions:

Maturity Value

The amount payable to an investor at the end of a fixed-term investment including principal and interest.

Invested

The allocation of resources, usually money, into financial ventures, stocks, or property with the expectation of generating a profit.

Equivalent Payments

Equivalent payments refer to a series of regular payments that have the same value under specified conditions, often used in the context of loans or mortgages.

Annual Rate Of Return

The annual percentage gain or loss on an investment.