Question

The andrew weissman trust received income, net of allocated expenses, in the following amounts: $50,000 capital gains. $4,000 qualified dividends. $8,000 taxable interest. the trust document allocates capital gains to trust principal. how much is the trust's distributive net income (dni)?

A. $8,000
B. $12,000
C. $58,000
D. $62,000

Answer 1

The Distributive Net Income (DNI) of the Andrew Weissman Trust, given the trust document's allocation of capital gains to principal and considering only the dividends and interest, is $12,000.

The correct answer is $12,000.

Step-by-step explanation:

The question pertains to the calculation of Distributive Net Income (DNI) for the Andrew Weissman Trust. DNI is a concept in trust taxation that represents the maximum amount that can be distributed to beneficiaries that will be taxable to them rather than the trust.

According to the information provided, the trust received $50,000 in capital gains, $4,000 in qualified dividends, and $8,000 in taxable interest. However, since the trust document allocates capital gains to the principal, these are not usually considered part of DNI unless the trust document or state law allows for them to be distributed to the beneficiaries. Therefore, the DNI in this case would generally be the sum of the dividends and interest, which amounts to $12,000.