Practice Quiz

Financial Planner

Category - Tax Planning

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What determines whether an estate or trust’s income is taxable to the estate or trust?
  1. The amount held by the estate or trust at the end of the taxable year
  2. The amount distributed to beneficiaries during the taxable year
  3. The distributable net income
  4. The distributable gross income
Explanation
Answer: C - Every estate and trust has a distributable net income (DNI) that is figured annually on the tax return. This is the amount that is distributed or required to be distributed, to beneficiaries, as of the end of the taxable year.
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