Can you please show your work so I may understand how you came up with the answe
ID: 2494285 • Letter: C
Question
Can you please show your work so I may understand how you came up with the answer? Thank you
The trustee of the Pieper Trust can distribute any amount of accounting income and corpus to the trust's beneficiaries, Lydia and Kent. This year, the trust's records reflect the following amounts.
Taxable interest income $40,000
Tax-exempt interest income 20,000
Long-term capital gains-allocable to corpus 80,000
Fiduciary's fees-allocable to corpus 9,000.
The trustee distributed $26,000 to Lydia and $13,000 to Kent.
a. What is Pieper's trust accounting income?
b. What is Pieper's DNI is $?
c. What is Pieper's taxable income is $?
d.What amounts are taxed to each of the beneficiaries?
Explanation / Answer
Answer to a. = $60,000
Answer to b = $51,000
Answer to c. $188,135
Answer d.
Item Totals Accounting Income Taxable income Distributable Net Income/ Distribution deduction Taxable Interest Income $40,000 $40,000 $40,000 Exempt Interest Income $20,000 $20,000 Net Long term capital gain $80,000 $80,000 Fiduciary Fees $9,000 ($6,000) Personal exemption ($100) Accounting Income/Taxable Income $60,000 $1,13,900 $1,13,900 Before the Distributions Deduction Exemption 100 Corpus capital gain / Loss ($80,000) Net Exempt Income $17,000 Distributable net Income $51,000 Distribution Deduction $2,28,235 Entity Taxable income $1,88,135 Deductible portion of DNI (taxable interest of $40,000 - $6,000 allocable fees ) *( $120,000 distribution / $51,000 DNI) = $80,000 Fiduciary fees allocation Taxable Income ($40,000 / $60,000)* $9,000 = $6,000 $20,000 - non deductible exempt income ($20,000 / $60,000 ) * $9,000 = $17,000 The trust is taxed on : Retained portion, deductible DNI ($80,000 * $69,000 / $51,000) = $1,08,235 Corpus capital gain $80,000 Exemption -100 Fiducairy taxable income $1,88,135 Beneficiary