CPA · Question 21 · Area II: Entity Tax Compliance
A complex trust has Distributable Net Income (DNI) of $40,000 (all taxable). The trust instrument requires a distribution of $10,000 to Beneficiary A. The trustee also uses discretion to distribute $40,000 to Beneficiary B. Total distributions = $50,000. How much income must Beneficiary A and Beneficiary B report?
Answer options:
Beneficiary A: $10,000; Beneficiary B: $40,000
Beneficiary A: $8,000; Beneficiary B: $32,000
Beneficiary A: $10,000; Beneficiary B: $30,000
Beneficiary A: $25,000; Beneficiary B: $25,000
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