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.

---

Definitions:

Return On Investment

A measure used to evaluate the efficiency or profitability of an investment, calculated by dividing net profit by the cost of the investment.

Sales To Invested Assets

A financial ratio that measures how efficiently a company uses its invested assets to generate sales.

Residual Income

The amount of net income generated beyond the minimum rate of return or benchmarks set by a business or investor.

Minimum Acceptable Return

The lowest return on investment that a manager or investor is willing to accept, often used in capital budgeting and investment planning.