A simple trust has the following receipts and expenditures for the current year. The long-term capital gain and trustee's fees are part of principal.
Dividends $20,000
Long-term capital gain $15,000
Trustee's fees $ 1,500
Distribution to beneficiary $20,000
a. What is the trust's taxable incom under the formula approach? (distribution deduction approach)(complex trusts)
b. What is the trust's taxable income under the short-cut approach? (simple trust)