The Doyle Trust reports distributable net income for the year of $100,000 and no income from tax-exempt sources. Under the terms of the trust instrument, the trustee must distribute $20,000 to Roger and $20,000 to Sally. After paying these amounts, the trustee is empowered to make additional distributions at its discretion. Exercising this authority, the trustee distributes an additional $25,000 to Roger and $50,000 to Sally. How much gross income from the trust must Sally recognize?

Question

Quizplus · Accepted Answer

Sally must recognize gross income equal to the sum of the amount the trustee is required to distribute to her ($20,000) plus the amount of additional distribution the trustee makes to her ($50,000), totaling $70,000. Roger's distributions do not affect Sally's gross income recognition.

The Doyle Trust Reports Distributable Net Income for the Year