An individual settled an inter vivos trust in favour of minor children. The property transferred to the trust for no consideration included investments on which there were accrued capital gains. Which one of the following statements is NOT correct with respect to the inter vivos$$ trust?

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Part $1$

A$.$

Any income and capital gains earned by the trust and allocated to the beneficiaries will be attributed back to the individual settlor.

B$.$

The settlor will recognize the accrued capital gains on the investments at the time of their transfer to the trust.

C$.$

The trust will not be subject to income tax on income that is distributed to the children during the year.

D$.$

The income retained in the trust will be subject to a federal income tax rate of$33\%.$