Alan Green created an irrevocable trust for the benefit of his adult daughter, Rita, and transferred various assets to the trust. In its most recently con-cluded taxable year (Year 1), the trust had the following items of income:

Interest from Morgan Stanley CD: $10,000

Qualified dividends from Merck: $20,000

Long-term capital gain from the sale of Apple stock: $50,000

Income from State of Florida General obligation Municipal Bonds: $20,000

The trust provides that Rita is to receive all of the trust income. It provides that capital gains are to be allocated to trust principal. There are no payments permitted to charities. The trust did not have any expenses in Year 1. The trust did not terminate in Year 1. For Year 1:

a. What is the gross income of the trust?

b. What is the tentative taxable income of the trust?

c. What is the DNI of the trust?

d. What is the fiduciary accounting income of the trust?

e. What is the taxable income of the trust?

f. How much taxable income must Rita report?

Answer rating: 100% (QA)

a Gross Income Calculation The gross income of the trust for Year 1 is 70000 which is calculated as ... View the full answer