An estate made a distribution to its sole beneficiary of $15,000 for the year. This distribution was not the result of a specific bequest. The estate had $40,000 of taxable interest and $34,000 of expenses attributable to earning that interest. What amount of the distribution is taxable to the beneficiary?

Question

Quizplus · Accepted Answer

The taxable distribution is calculated by subtracting the expenses attributable to earning the interest from the total distribution.

Taxable distribution = Total distribution - expenses attributable to earning the interest

Taxable distribution = $15,000 - $34,000

Taxable distribution = -$19,000

Since the calculated taxable distribution is negative, the beneficiary would not owe any taxes on the distribution. Therefore, the answer is B) $0.

An Estate Made a Distribution to Its Sole Beneficiary of $15,000