The Jiang Trust manages investment assets that were contributed by Kong several years ago. The trust distributed one-half of its DNI this year to Kong. Kong can retain all of the trust’s tax-exempt interest income if:

a. One-half of the exempt income belongs to the trust. No special allocations are allowed by Subchapter J.
b. Jiang is in a higher income tax bracket than is Kong.
c. Kong is in a higher income tax bracket than is the trust.
d. The tax-exempt bonds were contributed by Kong when the trust was created.