The sole income receipt for 2018 of an inter vivos trust is $70,000 in eligible dividends received from a public company. The only beneficiary of the trust is the adult son of the settlor whose sole income for the year is dividends received from the trust. He has no personal tax credits other than the basic personal tax credit and any credits related to his trust income. The value of the BPA tax credit is $2,160 ($14,398 x 15%).

Required: Calculate the 2018 net and taxable income and federal income tax payable for both the trust and the beneficiary assuming:

A. The beneficiary was paid $32,000 of the dividend income. The remainder of the income was left in the Trust. Assume an average personal federal tax rate of 15% for 2018.

B. The beneficiary was paid all the dividend income from the Trust. Assume an average personal federal tax rate of 18.5% for 2018.