Panther Trust has net accounting income and distributable net income of $100,000, $75,000 from taxable sources and $25,000 from tax-exempt sources. During the year, the trust makes a mandatory distribution to Julius and Steve of $50,000 each. How much of Steve's distribution is taxable?

Question

Quizplus · Accepted Answer

Steve's distribution is $50,000. The taxable portion of the trust's income is $75,000 out of $100,000 total income. Therefore, 75% of any distribution is taxable. 75% of $50,000 is $37,500.

Panther Trust Has Net Accounting Income and Distributable Net Income