[Anonymous]

Lyon, a cash-basis taxpayer, died on January 15, 2013. In 2013, the estate executor made the required periodic distribution of $9,000 from estate income to Lyon’s sole heir. The following pertains to the estate’s income and disbursements in 2013:

2013 Estate Income

$20,000 Taxable interest

10,000 Net long-term capital gains allocable to corpus

2013 Estate Disbursements

$5,000 Administrative expenses attributable to taxable income

For the 2013 calendar year, what was the estate’s distributable net income (DNI)?

a. $15,000

b. $20,000

c. $25,000

d. $30,000

(a) DNI would be net income $25,000 ($20,000 + $10,000 – $5,000) minus $10,000 net capital gains allocable to corpus, which equals $15,000.

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Why add the 10,000 net capital gains allocable to corpus if it’s just going to be subtracted right back out?

[seattleacct]

It's just telling you what's included in Net Income. The capital gains is part of net income, but not part of the amount that would be considered DNI.

B:76
A:64, 73, 91!
R:77
F:76

CPAexcel, Wiley Test Bank, Ninja Audio & Notes

[Anonymous]

What about the 9000 that was distributed?

[Author]

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