The Drabb Trust owns a plot of business-related land,basis of $50,000,fair market value of $38,000.Drabb is subject to a 28% marginal income tax rate.Its sole beneficiary,Eddie,is subject to a 15% marginal income tax rate.Drabb's current-year distributable net income is $95,000.What is the most preferable action for the trustee of Drabb to take,considering only the related tax consequences?

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The Drabb Trust is subject to a higher marginal rate than is Eddie,so the realized $12,000 loss will be most valuable if it is recognized by Drabb.A distribution of the asset to Eddie will not trigger a deductible loss,however,even if a § 643(e)election is made,because a fiduciary and a beneficiary of the same trust are related parties.Thus,the asset must be transferred to a third party,if Drabb is to generate a currently deductible loss.

The Drabb Trust Owns a Plot of Business-Related Land,basis of $50,000,fair