Determine the net income, taxable income and federal tax

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Question: During the current year, an inter vivos trust receives the following income:

Interest $20,000

Eligible dividends 40,000

Capital gains 16,000

One half of the income is paid to a beneficiary of the trust, Ms. A, a 20-year-old student, with no other source of income. The remainder of the income is retained by the trust. The trust designates the source of the income paid to the beneficiary as follows: interest $10,000, eligible dividends $20,000 and capital gains $8,000.

Required: Determine the net income, taxable income and federal tax payable for both Ms. A and the trust, and clearly indicate each amount.

 

Reference no: EM133528682

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