One-fourth of the Cruger Estate's distributable net income consists of net long-term capital gains. Thus, when income beneficiary Susie receives a $40,000 income distribution from the estate, $10,000 of it qualifies for the favorable Federal income tax rate.

Question

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One-fourth of the distributable net income consists of net long-term capital gains, which means that 25% of the $40,000 income distribution (i.e. $10,000) would qualify for the favorable Federal income tax rate.

One-Fourth of the Cruger Estate's Distributable Net Income Consists of Net