Problem 3 Complex Trust with Gains Not Distributed Facts - Prepare Federal tax return only 1. Dividends are present 2. Tax-exempt income is present ($13,174) Turnpike Auhtority 3. Short and long-term capital gains are presentand not distributed 4. Taxes, fiduciary fees, legal fees and investment advisory fees present 5. Income distribution to the beneficiary 6. Dividends: Total = 19,296; Qualified = 18,839 Banyon Industries Short-term capital gain: $5,888 - 10,000 shs -Van du Lait Mfg., Acq: 2/17/20 Sold: 12/12/20. Proceeds $50,667, Cost $44,779 Long-term capital gain: $29,167 - 10,000 shs - Costanza Ltd, Acq: 3/02/13, sold: 12/12/20 Proceeds $594,395. Cost $565,228. 7. State taxes from a prior year 603 Fiduciary Fees 8,704 Legal Fees. 1,295 Investment Advisor Fees. 10,019

8. Things to Note 1. Reduction of expenses due to presence of tax-exempt income Note - calculate the disallowance ratio for Fiduciary & Legal Fees 2. Denial of miscellaneous itemized deductions 3. Presence of Form 8960 imposing the Net Investment Income Tax on the trust 4. The trust pays tax on the capital gain Tax is calculated on Schedule D

Additional Information: Trust : Trust U/W Elaine Bennes Federal I.D: 22-1234567 Trustee: Cosmo Bennes Address: 111 Poppy Drive, Boca Del Vista, FL 33302 Beneficiary: Dolores J. Schoopie, 12 Newman Rd., Cranston, RI 87654 SSN: 123-34-5678