Fred, a cash-basis taxpayer, died on January 15, 2018. In 2019, the estate made a $9,000 distribution from estate income to Fred's sole heir. The estate had $20,000 of taxable interest and a $10,000 net long-term capital gain allocable to corpus. The estate incurred $5,000 in expenses attributable to the estate income. What is the estate's distributable net income (DNI)?

Question

Quizplus · Accepted Answer

DNI = $20,000 (interest) + $10,000 (net long-term capital gain) - $5,000 (expenses) = $25,000. However, the distribution to the heir is limited to the estate's DNI, which is $15,000.

Fred, a Cash-Basis Taxpayer, Died on January 15, 2018