The Trustee of the Epsilon Trust Distributed an Asset to Telly,a

question 113

Multiple Choice

The trustee of the Epsilon Trust distributed an asset to Telly,a qualifying income beneficiary.The asset's basis to the trust was $10,000,and its fair market value on the distribution date was $50,000.Which of the following statements is true?

• A)Lacking any election by the trustee, the trust recognizes $40,000 gross income on the distribution.
• B)Lacking any election by the trustee, Telly's basis in the asset is $10,000.
• C)Lacking any election by the trustee, Telly's basis in the asset is stepped up to $50,000.
• D)Assuming that the trustee made an election under § 643(e), the trust is allowed a $10,000 distribution deduction for this transaction.
• E)Assuming that the trustee made an election under § 643(e), Telly recognizes $10,000 gross income on the distribution.