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Indirect expenses of a trust are: Nondeductible. Allocated to tax-exempt income. Allocated to taxable income. Allocated...

Indirect expenses of a trust are:
Nondeductible.
Allocated to tax-exempt income.
Allocated to taxable income.
Allocated pro rata among all types of income.
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Answer #1

If you trust have tax free/ exempt income as well as taxable income in the indirect expenses are not 100% deductible. The expenses should be allocated to all types of income whether taxable or income. However there is some flexibility regarding the basis of allotment to the income as the law do not specify how it is to be attributed to all the different types of income.

Therefore the correct answer is indirect expense of a trust are allocated pro rata among all types of income.

Correct option is 4th

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