Question

Review the following​ situations:

a.	It distributes $20,000​, and all of its income is from taxable sources.
b.	It distributes $20,000​, and it has​ tax-exempt income​ (net of allocable​ expenses) of $1,300.
c.	It distributes $13,000​, and all of its income is from taxable sources.

Requirement

What is its distribution deduction under each of the​ situations?

Situation	Distribution deduction
a. It distributes $20,000, and all of its income is from taxable sources.
b. It distributes $20,000, and it has tax-exempt income (net of allocable expenses) of $1,300.
c. It distributes $13,000, and all of its income is from taxable sources.

Answer 1

Distribution deduction under form 1041 will be lower of :-

Distributble net income (or)

Amount actually distributed

and it can be obtained of income is from taxable sources and it this income will gets taxed in the hands who is recieving this income

A.Distributable income will be $20000

B.Distributable income will be 0

C.Distributable income will be $13000

Assumption :- It has been assumed that Distriutable net income is greater than amount distributed.

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