The conduit approach for fiduciary income tax means
A)the distributed income has the same character in the hands of the beneficiary as it has to the trust.
B)the distributed income goes to all beneficiaries proportionately.
C)the distributed income is determined by the trustee annually.
D)the distributed income of a remainder interest is determined by the property.

Question

Quizplus · Accepted Answer

The conduit approach for fiduciary income tax means that the distributed income has the same character (such as capital gains or ordinary income) in the hands of the beneficiary as it has to the trust. This approach avoids double taxation of the same income, as the beneficiary pays taxes on the income received from the trust. The other options listed are not accurate descriptions of the conduit approach.

The Conduit Approach for Fiduciary Income Tax Means