A Trust Has Net Accounting Income and Distributable Net Income

question 99

Multiple Choice

A trust has net accounting income and distributable net income (DNI) of $60,000, all from taxable sources. The trustee is required to distribute $40,000 of current income to Harry. In addition, the trustee makes a discretionary distribution to Harry of $10,000 and a discretionary distribution to Susan of $30,000. $20,000 of the $40,000 total discretionary distributions is from corpus. Gross income reportable by Harry is

• A)$50,000.
• B)$45,000.
• C)$37,500.
• D)$30,000.

---

Definitions:

Stockholders' Equity

The value of a company's assets minus its liabilities, representing the ownership interest of the shareholders.

Property, Plant, and Equipment

Property, Plant, and Equipment (PP&E) are tangible, long-term assets used in the operation of a business, not intended for resale.

Net Income

The amount of money that remains from revenues after all expenses, taxes, and costs have been subtracted; a measure of profitability.