This year, the Suarez Trust generated distributable net income (DNI) of $150,000, two-thirds of which was portfolio income, and the balance of which was exempt interest. Under the terms of the trust, Clara Suarez is to receive an annual income distribution of $30,000. At the discretion of the trustee, additional distributions can be made to Clara, or to Clark Suarez III. This year, the trustee's distributions to Clara totaled $60,000. Clark received $90,000. How much of the trust's DNI is assigned to Clark?

Question

Quizplus · Accepted Answer

The trust's DNI of $150,000 is fully distributed to the beneficiaries, Clara and Clark, with Clara receiving $60,000 and Clark receiving $90,000. Since the distributions exceed the specific $30,000 income distribution set for Clara, all distributed amounts, including Clark's $90,000, are assigned from the DNI, making the entire DNI taxable to the beneficiaries according to their respective distributions.

This Year, the Suarez Trust Generated Distributable Net Income (DNI)