Counsell Is a Simple Trust That Correctly Uses the Calendar

question 19

Essay

Counsell is a simple trust that correctly uses the calendar year for tax purposes. Its income beneficiaries (Kathie, Lynn, Mark, and Norelle) are entitled to the trust's annual accounting income in shares of one­fourth each. For the current calendar year, the trust has ordinary business income of $40,000, a long-term capital gain of $20,000 (allocable to corpus), and a trustee commission expense of $4,000 (allocable to corpus). Use the format of Figure
20.3 in the text to address the following items.
a. How much income is each beneficiary entitled to receive?
b. What is the trust's DNI?
c. What is the trust's taxable income?
d. How much is taxed to each of the beneficiaries?

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Definitions:

Restrictive Force

Factors or influences that limit capabilities, freedoms, or the scope of action.

T-Groups

Training groups designed to help participants improve interpersonal skills, group dynamics, and self-awareness through unstructured group interaction.

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A group creativity technique designed to generate a large number of ideas for the solution of a problem, encouraging open and unrestrained participation.