In the Year of Termination, a Trust Incurs a $20,000

question 72

Essay

In the year of termination, a trust incurs a $20,000 NOL. In addition, it has a $30,000 NOL carryover from the two preceding tax years. The trust distributes 40% of its assets to Sam, 30% of its assets to Alex, and 30% of its assets to Catherine. How much of the NOL can Sam (who has $150,000 of gross income)deduct on his return in the year that the trust terminates?

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Definitions:

Peripheral Fibers

Nerves located outside the central nervous system, involved in the transmission of sensory and motor signals to and from the central body.

Brady-

A prefix used in medical terminology to denote a slowness in rate or frequency, such as in bradycardia (slowness of the heart rate).

Hyper-

A prefix denoting above normal, excessively high, or increased in quantity.

Hypo-

A prefix denoting below, under, or less than normal, often used in medical terms to indicate a deficient or decreased state.