Ashley Peterson died on June 30. Pursuant to her will her estate will distribute $20000 to each...

Question:

Ashley Peterson died on June 30. Pursuant to her will her estate will distribute $20,000 to each of her 3 children each year until the estate is settled. In 2016 the estate had $30,000 of distributable income (DNI). How much will each child report on his or her 2016 tax return? The distribution is not a specific bequest.

Distributable Net Income

This income is used to distribute amongst the beneficiaries of the trust. This is the maximum amount of money received by the beneficiary that is taxable.

Answer and Explanation:

As per the question, a specific bequest is absence hence equal amount will be distributed among the children. Means each and everyone will get $10,000. As far as the tax return is concerned they will show $10,000 in their income tax return.

As per law, if the specific bequest is present then the named person will be given priority in distribution rest amount would be given to the other children.


Learn more about this topic:

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What Is Net Income? - Definition & Formula

from OSAT Business Education (CEOE) (040): Practice & Study Guide

Chapter 69 / Lesson 5
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