A Trust Whose Assets Are Stocks and Bonds Generates $13,000

question 12

Multiple Choice

A trust whose assets are stocks and bonds generates $13,000 of distributable net income (DNI) during its current taxable year; $2,500 of this amount is tax-exempt interest on municipal bonds, while the remaining amount is made up of dividends.According to the trust instrument, the trustee may make discretionary distributions of trust income; during the current year $1,000 is distributed to beneficiary B.The taxable portion of this amount is

• A)$0
• B)$808
• C)$1,000
• D)$708

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