A fiduciary is instructed by a trust instrument to distribute currently all trust income equally between two beneficiaries.Furthermore, the corpus of the trust is to be preserved intact for the remainderman.The instrument states that no charitable contributions are allowed from either income or principal.During the year, the trust's DNI was $23,000: $22,000 from rents and $1,000 from interest on a tax-exempt debenture.Based on these facts, the trust is a(n)

Question

Quizplus · Accepted Answer

The trust is a simple trust because it is required to distribute all income currently and equally between the two beneficiaries and is not allowed to make any charitable contributions. Additionally, the corpus must be preserved for the remainderman. The fact that there is interest income from a tax-exempt debenture does not change this classification as a simple trust.

A Fiduciary Is Instructed by a Trust Instrument to Distribute