The Harding Estate generated distributable net income this year of $90,000, one-third of which was tax-exempt interest, and the balance of which was long-term capital gain.Branden Harding, the sole income beneficiary of the Estate, received a distribution of the entire $100,000 fiduciary income of the entity.How does Branden report the distribution?

Question

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Branden reports the distribution based on the character of the income. The estate's distributable net income consists of $60,000 long-term capital gain and $30,000 tax-exempt interest. Since Branden received the entire fiduciary income, he reports $60,000 as long-term capital gain and $30,000 as exempt interest.

The Harding Estate Generated Distributable Net Income This Year of $90,000