Question

In 2001, Larry creates a trust with Ted as trustee. Ted (as trustee) must distribute all income to Jeff and Susie equally. Additionally, distributions of principal may be made to Jeff, Susie, and Leon at Ted's discretion. In 2012, the trust has $10,000 of interest and $10,000 of dividends. Additionally, the trust received $100,000 for the sale of an asset with a basis of $90,000. In 2012, $20,000 is distributed to Jeff, $30,000 is distributed to Susie and $40,000 is distributed to Leon. How much income does each of Jeff, Susie, Leon and the trust report and why

Answer 1

Jeff 20,000

Susie 30,000

Leon 40,000

trust report 120000-20000-30000-40000-90000 = -60000