Question

A trust has distributable net income of 14,000 and distributes 20,000 to the sole beneficiary. What amounts are taxable to the trust and to the beneficiary?

Answer 1

The trust's taxable amount is $14,000, while the beneficiary's taxable amount is $20,000.

Step-by-step explanation:

The taxable amount for the trust is limited to its distributable net income, which in this case is $14,000. Therefore, the trust will report $14,000 as taxable income.

The beneficiary, on the other hand, receives a distribution of $20,000 from the trust. This distribution is taxable to the beneficiary.