Your client has taken the following actions: Established an inter vivos trust in which she reserved the power to revoke the trust if she is not satisfied with its operation Funded the trust with a diversified portfolio Named herself trustee and specified that, upon her death, her husband is to become the trustee Named herself and her husband as the income beneficiaries and her children as remainder beneficiaries after the surviving spouse's death Which one of the following is an income tax implication of this trust arrangement?

A)

The trust must pay income tax on earned income that is not distributed.

B)

Your client, the grantor, must pay income tax on all income earned by the trust.

C)

The trust receives a deduction for the distributable net income paid to the lifetime income beneficiaries.

D)

Income earned by the trust is taxed to the children as irrevocable remainder beneficiaries.