Harry, the Sole Income Beneficiary, Received a $40,000 Distribution from the Lucy

question 126

True/False

Harry, the sole income beneficiary, received a $40,000 distribution from the Lucy Trust in a year when the trust's distributable net income was $30,000. Harry's AGI increases by $40,000.

---

Definitions:

State Taxes

State taxes are financial charges imposed by individual states on income, property, sales, and other activities, varying widely between different states.

Local Taxes

Taxes imposed by local governments, such as cities or counties, which can include property taxes, sales taxes, and income taxes.

W-2

The form that an employer must send to an employee and the IRS at the end of the year, which reports the employee's annual wages and taxes withheld.

Income Statement

A financial statement that shows a company's revenues and expenses over a specific period of time, resulting in net profit or loss.