Under a trust created by the will of the late Reginal, the trust income is to be
Question:
Under a trust created by the will of the late Reginal, the trust income is to be distributed as follows:
§ one-quarter to his widow;
§ to a son, aged 26, the amount the trustee considers necessary to meet his educational needs; and
§ the remainder of the income to a son, aged 20, currently serving a three-year sentence for culpable driving.
The net income of the trust estate for the current tax year amounts to $42,000, of which $4,000 has been applied for the education of the son, aged 26.
Required:
Prepare a trust distribution statement showing how the income of the trust estate for the current tax year would be assessed. Discuss your answer by referring to relevant income tax legislation.
Financial Accounting
ISBN: 978-1259222139
9th edition
Authors: Robert Libby, Patricia Libby, Frank Hodge