The Suarez Trust Generated Distributable Net Income (DNI) This Year

question 64

Multiple Choice

The Suarez Trust generated distributable net income (DNI) this year of $150,000, two-thirds of which was portfolio income, and the balance of which was exempt interest. Under the terms of the trust, Clara Suarez is to receive an annual income distribution of $30,000. At the discretion of the trustee, additional distributions can be made to Clara, or to Clark Suarez III. This year, the trustee's distributions to Clara totaled $60,000. Clark received $90,000. How much of the trust's DNI is assigned to Clark?

• A) $0, only first-tier distributions are subject to Federal income tax.
• B) $60,000
• C) $75,000
• D) $90,000

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Definitions:

Cash Inflows

The movement of money into a business or account, often from sales, investments, financing, or other sources.

Cash Outflows

Financial transactions that involve the spending of money, leading to a decrease in the cash balance of a business.

Current Ratio

A liquidity ratio that measures a company's ability to pay short-term obligations by dividing current assets by current liabilities.

Current Liabilities

Short-term financial obligations that a company is required to pay within one year, such as accounts payable and short-term loans.