The Doyle Trust Reports Distributable Net Income for the Year

question 53

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 $20,000 to Roger and $20,000 to Sally. After paying 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 $50,000 to Sally. How much gross income from the trust must Sally recognize?

• A) $70,000
• B) $60,000
• C) $40,000
• D) $20,000

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Definitions:

Anticipatorily Breached

This refers to a situation in law where a party indicates, either through their actions or words, that they will not fulfill their contractual obligations before the performance is due.

Resale

The act of selling an item that has already been purchased from the original seller to another buyer.

Consequential Damages

Damages that can be claimed in a lawsuit which are not a direct result of the act but occur as a secondary consequence of the wrongful act.

Unconscionable

Describing terms or conditions that are excessively unfair or unjust, often to a degree that they are deemed unenforceable under law.