The Trustee of the Epsilon Trust Distributed an Asset to Telly

question 86

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 $25,000. Which of the following statements is true?

• A) Assuming that the trustee made an election under § 643(e), the trust is allowed a $10,000 distribution deduction for this transaction.
• B) Assuming that the trustee made an election under § 643(e), Telly recognizes $10,000 gross income on the distribution.
• C) Lacking any election by the trustee, the trust recognizes $15,000 gross income on the distribution.
• D) Lacking any election by the trustee, Telly's basis in the asset is $10,000.
• E) Lacking any election by the trustee, Telly's basis in the asset is stepped up to $25,000.

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Definitions:

Variance

A measure of the spread or dispersion of a set of data points, indicating how much the data varies from the average of that set.

Outliers

Observations in a dataset that significantly differ from the other data points, often indicating variability or errors.

1.5*IQR

A statistical calculation used to identify outliers. It involves multiplying the interquartile range (IQR) by 1.5 and applying this value above the upper quartile and below the lower quartile.

3*IQR

A statistical range calculated as three times the interquartile range (IQR), used to identify outliers by delineating the boundaries beyond which data points are considered exceptional.