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.

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Definitions:

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