A Trust Is Required to Distribute All of Its Income

question 27

Multiple Choice

A trust is required to distribute all of its income currently. Two years ago, it had a $10,000 capital loss. Last year, it had a $3,000 capital gain. This year, the trust is terminated. Albert has a 40% interest in the trust, and Barbara has a 60% interest. Barbara receives a capital loss pass-through of

• A)$0.
• B)$2,400.
• C)$4,200.
• D)$7,000.

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Definitions:

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Corporate Law

A body of law governing the rights, relations, and conduct of persons, companies, organizations, and businesses.

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An authorized business setup involving two or more persons, sharing both the responsibilities of management and the financial gains.

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The area of finance dealing with the sources of funding and the capital structure of corporations, and the actions that managers take to increase the value of the firm to the shareholders.