The Doyle Trust Reports Distributable Net Income for the Year

question 143

Multiple Choice

The Doyle Trust reports distributable net income for the year of $100,000 and no income from tax-exempt sources. Under the terms of the trust instrument, the trustee must distribute $30,000 to Roger and $30,000 to Sally. After payment of these amounts, the trustee is empowered to make additional distributions at its discretion. Exercising this authority, the trustee distributes an additional $25,000 to Roger and $25,000 to Sally. How much income from the trust must Sally recognize?

• A) $25,000.
• B) $30,000.
• C) $50,000.
• D) $55,000.

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Definitions:

Travel Costs

Expenses associated with traveling for business, medical, or charitable purposes that may be deductible under certain conditions.

IRS Method

The approach or procedure specified by the Internal Revenue Service for calculating or reporting tax-related information.

Net Rental Income

The income received from rental properties after deducting expenses such as mortgage interest, property taxes, maintenance, and management fees.

Security Deposit

Money paid upfront as security against damage or non-payment, commonly associated with rental agreements, to be returned or applied as per agreement terms.