The governing instrument for the Lopez Trust contains no definitions of income and principal.The Trust is located in a state that has adopted the Uniform Act.In the current year,the trust reports the following receipts and disbursements:
$\begin{array} { l }
\text { Dividends}&\$10,000\
\text { Proceeds from sales of stock, including $ \$ 10,000 $ of gain}&\$40,000\
\text {Trustee's fee, all charged to income }&\$500\
\text {CPA's fee for preparation of tax return }&\$200\
\end{array}$
What is the trust's net accounting income?

Question

The governing instrument for the Lopez Trust contains no definitions of income and principal.The Trust is located in a state that has adopted the Uniform Act.In the current year,the trust reports the following receipts and disbursements:
 $\begin{array} { l  }
 \text { Dividends}&\$10,000\
 \text { Proceeds from sales of stock, including $ \$ 10,000 $ of gain}&\$40,000\
 \text {Trustee's fee, all charged to income }&\$500\
 \text {CPA's fee for preparation of tax return }&\$200\
\end{array}$
 What is the trust's net accounting income?

Quizplus · Accepted Answer

The Answer is $10,000 - $500 - $200 = $9,300.The gain on the sale of stock and the rest of the sales proceeds constitute corpus.

The Governing Instrument for the Lopez Trust Contains No Definitions