Which of the following best defines an income trust?
A)a fund that is set up for the purchase of debt for the company
B)a fund that is set up to receive the after-tax dividends of the corporation
C)a fund that is set up to receive the before-tax cash payments of the corporation
D)a fund that holds assets for the corporation

Question

Quizplus · Accepted Answer

An income trust is a fund or investment vehicle that is set up to receive the before-tax cash payments of a corporation. It is typically created to hold and manage income-producing assets such as real estate or business operations. Investors in the income trust receive regular distributions of the income generated by the assets held in the trust.

Option A is incorrect as it describes a debt fund, not an income trust. Option B is incorrect as it refers to after-tax dividends, whereas income trust is set up to receive before-tax payments. Option D is incorrect as it refers to a fund that holds assets for the corporation, rather than one set up to receive cash payments.

Which of the Following Best Defines an Income Trust