Victory is a simple trust that uses the calendar year for tax purposes. Accounting income is required to be distributed equally to its four income beneficiaries.

For the current calendar year, the trust incurs the following:

Ordinary taxable business income of $60,000

Tax exempt interest income $20,000

Long-term capital gain of $16,000 (allocable to corpus)

Trustee commission expense of $6,000 (allocable to corpus)

Use the following partially completed worksheet to answer the questions below. You can't type into this worksheet, but you can use it as a guide since some of the information has been provided for you.

Item	Totals	Accounting Income	Taxable Income	Distributable Net Income / Distribution Deduction
Ordinary Income	60000
Tax-exempt inc	20000
LTCG corpus	16000
Fiduciary Fees (alloc based on taxable & exempt income)	(6000)		(4500)
Exemption	?
Acctg inc/TI before distrib deduc		Step 1	Step 2	71200
Exemption
LTCG
Exempt income (Total less amount alloc to exempt income)
Distributable Net Income
Distribution Deduction (DNI reduced by exempt)			Step 3
Entity taxable income			Step 4

Answer the following questions, using the partially completed format above to help you.

ENTER WHOLE DOLLAR ANSWERS ONLY, NO DECIMALS, NO COMMAS!

a. How much income is paid/distributed to the beneficiaries in total?

b. How much of the commission expense is allocated to exempt income for purposes of computing the DNI?

c. What is the trusts DNI?

d. What is the amount of income taxed to the trust, the trusts taxable income, after the distribution deduction? Remember, exempt income, net of allocated fees, is not taxable!

e. How much is the total taxed to the beneficiaries?

f. What is the total amount of trust income taxed, beneficiaries and trust combined?