The Roz Trust Has Distributable Net Income for the Year

question 89

Multiple Choice

The Roz 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 $30,000 to Roger and $30,000 to Sally. After payment of these amounts, the trustee is empowered to make additional distributions at its discretion. Exercising this authority, the trustee distributes an additional $40,000 to Roger and $40,000 to Sally. How much income from the trust must Sally recognize?

• A) $90,000.
• B) $60,000.
• C) $50,000.
• D) $40,000.

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Definitions:

Tax Cuts

Tax cuts refer to reductions in the amount of taxes owed by individuals or corporations, often implemented to stimulate economic growth.

National Income

Net domestic product minus indirect business taxes.

Property Owners

Individuals or entities that hold legal title to land, buildings, or other types of real estate.

Poverty Line

The lowest amount of money required to maintain a satisfactory quality of life in a specific country.