Interest income qualified as tax exempt

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In January of 2013, SLU of Tampa created a simple trust. This simple trust received interest income in an amount of $4,500 on October 6th of 2016. According to the IRS, this interest income qualified as tax exempt. SLU of Tampa invested $100,000 in long-term mixed funds in 2013. As a result, the trust received capital gain of $2,500 at the end of 2016. In addition, the trust also received interest income of $20,000 in Wells Fargo’s Bond.In the state of Florida, simple trusts are required to follow the Uniform Act when it comes to accounting income. At the same time, SLU of Tampa requires to account for gains from long term investment. The trustee’s fee has increased 50% since the inception of the trust. At the end of 2016, the Trustee distributed $24,000 to the beneficiary (Martina and family) and charged $1,000 to the trust.

1) Please calculate SLU of Tampa Taxable income under the formula approach from chapter 14.

2) After you have establish the taxable income under the formula approach, what is the tax liability for the SLU of Tampa in 2016 tax year?

Reference no: EM131265271

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