In the current year, a trust has distributable net income (DNI)of $30,000. During the year, the trust makes a mandatory distribution to Sarah of $5,000 and a discretionary distribution of $10,000 to Kyle. The trust has no tax-exempt income. The distribution deduction of the trust is
A)$30,000.
B)$15,000.
C)$10,000.
D)$5,000.

Question

Quizplus · Accepted Answer

The distribution deduction of a trust is limited to the amount of DNI for the year, which is $30,000 in this case. However, since the trust made distributions totaling $15,000 ($5,000 to Sarah and $10,000 to Kyle), the distribution deduction is limited to $15,000, which is the total amount of distributions made. Therefore, the correct answer is B.

In the Current Year, a Trust Has Distributable Net Income