The Suarez Trust generated distributable net income (DNI) this year of $150,000, two-thirds of which was portfolio income, and the balance of which was exempt interest. Under the terms of the trust, Clara Suarez is to receive an annual income distribution of $30,000. At the discretion of the trustee, additional distributions can be made to Clara, or to Clark Suarez III. This year, the trustee's distributions to Clara totaled $60,000. Clark received $90,000. How much of the trust's DNI is assigned to Clark?

Question

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The trust's DNI is $150,000. Clara received $60,000, which is a first-tier distribution. Clark received $90,000, which is a second-tier distribution. Second-tier distributions are assigned DNI to the extent of the trust's DNI less first-tier distributions. Therefore, Clark is assigned $90,000 of DNI.

The Suarez Trust Generated Distributable Net Income (DNI) This Year