Reyes contributed assets to a trust, designating daughter Maria as the income beneficiary, and grandson Julio as the remainder beneficiary. This year, fiduciary accounting income was $50,000. The trustee accumulated $5,000 of this amount and added it to trust corpus. Reyes pays Federal income tax on $5,000 for the year.

Question

Quizplus · Accepted Answer

The trust, not Reyes, is responsible for paying taxes on the accumulated income that is added to the trust corpus. Reyes would not pay Federal income tax on the $5,000 accumulated by the trust.

Reyes Contributed Assets to a Trust, Designating Daughter Maria as the Income