Fred, a cash- basis taxpayer, died on January 15, 2016. In 2017, the estate made a $9,000 distribution from estate income to Fred's sole heir. The estate had $20,000 of taxable interest and a $10,000 net long- term capital gain allocable to corpus. The estate incurred $5,000 in expenses attributable to the estate income. What is the estate's distributable net income (DNI)?

Question

Quizplus · Accepted Answer

DNI = $20,000 (interest) + $10,000 (capital gain) - $5,000 (expenses) = $25,000. However, the estate made a $9,000 distribution to the heir, which reduces the DNI to $25,000 - $9,000 = $15,000.

Fred, a Cash- Basis Taxpayer, Died on January 15, 2016