Trust X requires that the trustee make the following payments each year:

$5,000 to charity (out of income)

20,000 to A (out of income only)

12,000 to B (annuity out of income, then principal)

Assume that the trust has accounting income and gross taxable income, (all interest),

of 30,000 for the year and makes all payments.

b) Assuming that the trust has an additional deductible expense of $10,000 chargeable to principal, compute the amount of trust income taxable to A and B, respectively.

c) Assume instead that payments to B, though authorized by the trust, are purely discretionary. Assuming all other facts are the same as in (b), compute the amount of trust income taxable to A and B, respectively.