Harry, the sole income beneficiary, received a $40,000 distribution from the Lucy Trust in a year when the trust's distributable net income was $50,000. Harry's AGI can increase by as much as $50,000.

Question

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Harry's AGI can increase only by the amount he actually received from the trust, which is $40,000, not by the trust's distributable net income of $50,000.

Harry, the Sole Income Beneficiary, Received a $40,000 Distribution from the Lucy