A trust is required to distribute 10% of its income to Eleanor. In addition, the trustee in his discretion may distribute income to Eleanor and/or Marshall. The trust has net accounting income of $50,000, none of which is tax-exempt. The trust distributes the $5,000 mandatory payment to Eleanor and also distributes discretionary amounts of $5,000 to Eleanor and $5,000 to Marshall. How much must Eleanor include in income?

Question

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Eleanor must include the $5,000 mandatory payment in her income, as well as the $5,000 discretionary payment she received. Therefore, her total income from the trust is $10,000. Marshall's income is not relevant to the question.

A Trust Is Required to Distribute 10% of Its Income