Panther Trust Has Net Accounting Income and Distributable Net Income

question 50

Multiple Choice

Panther Trust has net accounting income and distributable net income of $100,000, $75,000 from taxable sources and $25,000 from tax-exempt sources. During the year, the trust makes a mandatory distribution to Julius and Steve of $50,000 each. How much of Steve's distribution is taxable?

• A)$12,500
• B)$25,000
• C)$37,500
• D)$50,000

---

Definitions:

Corporate Reinvestment

The act of a company using its profits to invest back into its own operations, projects, or assets to support growth, improve products or services, and enhance shareholder value.

Company Stock

represents shares of ownership in a corporation, giving holders a claim on part of the company’s assets and earnings.

Configuration

The arrangement or set-up of components or elements in a particular form or structure.

Multinational Company

A corporation that operates in several countries but has its headquarters in one country, often involved in producing and selling goods or services in various markets.