A simple trust has the following receipts and expenditures for 2022. The trust instrument is silent with respect to capital gains, and state law concerning trust accounting income follows the Uniform Act. Assume the trustee’s fee is charged equally to income and to principal.

a. What is the trust’s taxable income under the formula approach of Figure C:14-1?
b. What is the trust’s tax liability?

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Corporate bond interest Tax-exempt interest Long-term capital gain Trustee's fee Distribution to beneficiary $40,000 9,000 5,000 2,000 48,000