The Sam Trust operates a welding business. Its current-year cost recovery deductions properly amount to $75,000. Sam’s accounting income was $100,000, of which $40,000 was distributed to first-tier beneficiary Chuck, $25,000 was distributed to second-tier beneficiary Ruby, and $35,000 was accumulated by the trustee. 

Ruby also received a $25,000 discretionary corpus distribution. Sam’s DNI was $80,000. Identify the treatment of Sam’s cost recovery deductions

Answer rating: 100% (QA)

Cost recovery is the income distribution method in a tier by Sam enterprises whose useful ... View the full answer