List the Three Major Functions of Distributable Net Income (DNI)in

question 77

Essay

List the three major functions of distributable net income (DNI)in determining how the beneficiaries of a trust or estate account for their distributions received for the tax year.

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Definitions:

Hedge Funds

Investment funds that employ various strategies to earn active returns for their investors, including leveraging, derivatives, and short selling.

Private Investment Companies

Firms that invest pooled funds from investors in a variety of assets, not publicly traded and often focusing on wealth management.

Qualified Investors

Individuals or entities that meet specific financial criteria set by regulatory authorities, allowing them to invest in certain complex and potentially riskier investments.

Leverage

The use of borrowed capital to increase the potential return of an investment, also referring to the ability to influence situations or people to achieve a particular outcome.