A trust is required to distribute all of its income annually. It distributes all of the income and $2,000 of principal to the beneficiary. Which of the following statements is correct?

Question

Quizplus · Accepted Answer

The trust is a simple trust because it is required to distribute all of its income annually. The trust is allowed a $300 exemption because it distributed more than $2,000 of principal to the beneficiary.

A Trust Is Required to Distribute All of Its Income