The trust pays 5000 of the discretionary distributions from


Question - Apple Trust reports net accounting income of $40,000, all from taxable sources. The trustee is required to distribute $15,000 annually to Megan. The trustee also makes discretionary distributions of $30,000, $7,500 to Megan and $22,500 to Caroline. The trust pays $5,000 of the discretionary distributions from corpus. What is the taxable amount of the Megan's tier 2 distribution?

a. $7,500

b. $6,250

c. $15,000

d. $22,500

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Accounting Basics: The trust pays 5000 of the discretionary distributions from
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