A trust has the following activity: Interest Income ,000; Dividends ,000; Capital Gains (allocable to corpus) ,000; Trustee Fees (allocable to income) ,000. What is the Distributable Net Income (DNI)?

Answer options:

,000

How to approach this question

DNI Formula: Taxable Income - Capital Gains (if corpus) + Tax Exempt Interest. Basically, it's the cash available to give to beneficiaries.

Full Answer

B.,000✓ Correct

Distributable Net Income (DNI) generally excludes capital gains that are allocated to corpus. DNI = Interest (,000) + Dividends (,000) - Expenses (,000) = ,000.

Common mistakes

Including capital gains in DNI.

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