The Reagan Trust Has Distributable Net Income for the Year

question 2

Multiple Choice

The Reagan Trust has distributable net income for the year of $200,000 and no income from tax-exempt sources.Under the terms of the trust instrument, the trustee must distribute $180,000 to Chloe and $120,000 to Sierra.After paying these amounts, the trustee is empowered to make additional distributions at its discretion.Exercising this authority, the trustee distributes an additional $75,000 to Chloe and $75,000 to Sierra.How much gross income from the trust must Chloe recognize?

• A)$195,000.
• B)$120,000.
• C)$86,667.
• D)$80,000.
• E)$75,000.

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