[Anonymous]

Hi, I was hoping someone could help me out. This is from a Becker simulation:

The information relating to the company is the following:

Taxable interest $800

Non-taxable interest $500

Capital gain $4000

Rental Income $4,300

Rental Expense $1,300

Trustee fee (70% allocated to principal and 30% to income) $2,000

DNI = $2,300 (I understand this part)

Income distribution reduction = $1800 (2300 – 500 adjusted tax-exempt interest)

For the income distribution reduction, I know that you have to subtract the adjusted tax-exempt interest, but I thought you had to allocate a portion of the trustee fee to the non-taxable interest to get the net amount. How come they don’t do that here? DNI overall is just starting to confuse me, please help! Thanks!