[Anonymous]

During the current year, a trust reports the following information:

dividends $10,000

interest from corp bonds $12,000

tax exempt interest from state bonds – $4,000

capital gain (allocated to corpus) – $2,000

trustee fee (allocated to corpus) – $6,000

What is the trust’s accounting income?

a. $26,000

b. $22,000

c. $34,000

d. $28,000

The answer is $26,000 (dividends 12,000 + interest from corporate bonds $12,000 + tax exempt interest from state bonds $4,000)

Can someone please explain this to me? What does the allocation to corpus have an effect on?

Also, is there any differences between trust and estate income?

[lavendersky]

good ques. Becker just throw us the chart with principal (corpus) vs. income without really explaining to us wth that is and how it effect other things.

All I know is that capital gain and the trustee fee are consider principal (corpus) so they must remain w/ the trust. I don't think there's much difference to estate and trust income b/c based on R4-62 it pretty much categorize estates and trusts together. I'm just assuming whatever is consider corpus doesn't include to income? =shrugs=

anyone else who understands it??

FAR- PASSED
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BEC-

You got to do what you have to do!

[Author]

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