Reyes contributed assets to a trust and designated daughter Maria as the income beneficiary and grandson Julio as the remainder beneficiary. This year, fiduciary accounting income was $50,000. The trustee accumulated $5,000 of this amount and added it to trust corpus. Reyes pays Federal income tax on $5,000 for the year.

Question

Quizplus · Accepted Answer

The trust itself, not Reyes, would typically be responsible for any taxes due on income that is accumulated and added to the trust corpus, unless the trust document specifically provides for a different tax treatment.

Reyes Contributed Assets to a Trust and Designated Daughter Maria