46. This year, the Nano Trust reported $50,000 entity accounting income and $40,000 distributable net income...
46. This year, the Nano Trust reported $50,000 entity accounting income and $40,000 distributable net income (DNI). Nano distributed $30,000 cash to Horatio, its sole income beneficiary. Nano is a complex trust. Nano's distribution deduction is:
a.$0. Because the distributions of a complex trust are discretionary, no deduction is allowed.
b.$50,000.
c.$30,000.
d.$40,000.
Homework Answers
c. $30,000
Explanation:
The allowable deduction is the lesser of the following:
- the Distributable Net Income or
- the amount actually distributed or required to be distributed under the terms of the will (or trust) or state law to the beneficiary.
In the present scenario, DNI of Nano is $40,000 and actually distributed amount is $30,000. Hence distributable deduction is allowed for $30,000 being the lesser of the above amounts
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