The Ulrich Trust has distributable net income (DNI) for the year of $100,000 and no income from tax-exempt sources.Under the terms of the trust instrument, the trustee must distribute $60,000 to Roger and $60,000 to Sally.After paying these amounts, the trustee is empowered to make additional distributions at its discretion.Exercising this authority, the Ulrich trustee distributes an additional $15,000 to Roger and $15,000 to Sally.How much gross income from the trust must Roger recognize?

Question

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Roger must recognize gross income equal to the amount of his required distribution ($60,000) plus the additional discretionary distribution he receives ($15,000). Therefore, Roger must recognize $75,000 in gross income from the trust. Sally's required distribution plus her discretionary distribution do not exceed the amount of DNI, so she does not need to recognize any additional gross income from the trust.

The Ulrich Trust Has Distributable Net Income (DNI) for the Year