A Trust Holds Assets That Will Generate Net Investment Income

question 37

Multiple Choice

A trust holds assets that will generate net investment income (NII) and trigger the additional Medicare taxes. The trustee should:

• A) Distribute all of the NII to trust beneficiaries.
• B) Retain all of the NII every tax year.
• C) Increase the turnover rate of the investments that the entity holds.
• D) Sell the NII assets and invest in high-yield bonds instead.

---

Definitions:

Borderline Personality Disorder

A mental disorder characterized by unstable moods, behavior, and relationships.

Cognitive Techniques

Psychological strategies used to improve mental processes such as memory, attention, and problem-solving.

Mindfulness Approach

A mental technique focusing on being intensely aware of what you're sensing and feeling in the moment, without interpretation or judgment.

Behavioral Techniques

Methods used in behavior therapy to change undesirable behaviors through conditioning and learning strategies.