In the current year, a trust has distributable net income (DNI) of $30,000. During the year, the trust makes a mandatory distribution to Sarah of $5,000 and a discretionary distribution of $10,000 to Kyle. The trust has no tax- exempt income. The distribution deduction of the trust is

Question

Quizplus · Accepted Answer

The distribution deduction for a trust is limited to the lesser of DNI or the total distributions made during the year. In this case, the total distributions made during the year are $15,000 ($5,000 to Sarah and $10,000 to Kyle). Therefore, the distribution deduction is $15,000, which is less than the total DNI of $30,000.

In the Current Year, a Trust Has Distributable Net Income