Question

Michelle’s trust is subject to 3.8% surtax on the lesser of the trust’s net investment income...

Michelle’s trust is subject to 3.8% surtax on the lesser of the trust’s net investment income or the excess of the trust’s adjusted gross income over the $12,400 threshold (the highest trust tax rate). Explain how the trust can avoid this tax. What are the tax obligations of nonexempt charitable trusts?

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Answer #1

MUNICIPAL BONDS MAY BE AN ATTRACTIVE INVESTMENT OPTION TO HELP AVOID THE SURTAX.

SO BY INVESTING IN MUNICIPAL BONDS SURTAX CAN BE AVOIDED.

WHAT ARE THE TAX OBLIGATIONS OF NONEXEMPT CHARITABLE TRUSTS

A NONEXEMPT CHARITABLE TRUST MAY NOT HAVE ANY TAXABLE INCOME IF IT TRULY PAYS OR USES ALL OF ITS INCOME FOR CHARITABLE PURPOSES. ... ALONG WITH FORM 1041, NONEXEMPT CHARITABLE TRUSTS MUST ALSO FILE FORM 990-PF. ADDITIONALLY, THIS INCLUDES A 1 OR 2 PERCENT EXCISE TAX ON INVESTMENT INCOME

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