Suggest language to betty that minimize annual distribution

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Problem - The Polozzi Trust will incur the following items in the next tax year, its first year of existence.

Interest income $25,000

Rent income 100,000

Cost recovery deductions for the rental activity 35,000

Capital gain income 40,000

Fiduciary and tax preparation fees 7,000

Betty, the grantor of the trust, is working with you on the language in the trust instrument relative to the derivation of annual accounting income for the entity. She will name Shirley as the sole income beneficiary and Benny as the remainder beneficiary.

a. Suggest language to Betty that will maximize the annual income distribution to Shirley.

b. Suggest language to Betty that will minimize the annual distribution to Shirley and maximize the accumulation on Benny's behalf.

Reference no: EM132665446

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