Beneficiary Shaquille received $50,000 from the Adams Trust.Applying the trustee's discretion, $30,000 of the distri?bution was from accounting income, and $20,000 was from trust corpus.Beneficiary Susan received $20,000 from the trust, all of which was from accounting income.The trust generated $30,000 in cost recovery deductions.Its accounting income for the year was $50,000.How much can Shaquille deduct with respect to the cost recovery deductions that Adams generated?

Question

Quizplus · Accepted Answer

Shaquille can deduct the portion of the cost recovery deductions that came from the accounting income distributed to him, which is $30,000. However, the portion of the distribution that came from trust corpus is not eligible for the cost recovery deduction, so Shaquille cannot deduct the $20,000 that came from trust corpus. Therefore, his total deduction is $30,000 - $20,000 = $10,000.

Beneficiary Shaquille Received $50,000 from the Adams Trust