The Ulrich Trust Has Distributable Net Income for the Year

question 103

Multiple Choice

The Ulrich Trust has 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 $60,000 to Roger and $60,000 to Sally.After paying these amounts, the trustee is empowered to make additional distributions at its discretion.Exercising this authority, the Ulrich trustee distributes an additional $20,000 to Roger and $20,000 to Sally.How much gross income from the trust must Sally recognize?

• A)$80,000.
• B)$60,000.
• C)$50,000.
• D)$20,000.

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Definitions:

Income Ratios

Financial metrics that assess a company's ability to generate profit relative to its revenue, operating costs, or other financial metrics over a specific period.

Liquidation Process

The procedure through which a company's assets are sold off to pay creditors and close the business, often occurring during bankruptcy proceedings.

Capital Deficiencies

Situations where a business lacks the necessary funds or assets to support its operations and growth.

Income Ratios

Financial metrics that relate a company's income to other financial variables to assess performance, profitability, and efficiency.