This Year, the Zhao Estate Generated Distributable Net Income (DNI)

question 56

Multiple Choice

This year, the Zhao Estate generated distributable net income (DNI) of $100,000, one-fourth of which was tax- exempt interest, and the balance of which was long-term capital gain. Kyle Zhao, the sole income beneficiary of the estate, received a distribution of the entire $125,000 accounting income of the entity. How does Kyle report the distribution?

• A) $75,000 long-term capital gain, $25,000 exempt interest.
• B) $50,000 long-term capital gain, $50,000 exempt interest.
• C) $75,000 long-term capital gain, $25,000 ordinary income.
• D) $93,750 long-term capital gain, $31,250 exempt interest.

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Definitions:

Manage Emotions

The ability to recognize, understand, and control one's own feelings and to influence the emotions of others in a positive way.

Social Relationships

Connections between individuals or groups characterized by mutual expectations, shared engagements, or emotional bonds.

Emotional Competency

The ability to recognize, understand, manage, and reason with emotions in oneself and others to enhance thought and relationships.

Self-Awareness

The conscious knowledge of one's own character, feelings, motives, and desires, leading to a deeper understanding of oneself.