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Under the terms of the Lagos Trust instrument, the trustee has discretion to distribute or accumulate income on behalf of Willie, Sylvia, and Doris in equal shares. The trustee can also invade corpus for the benefit of any of the beneficiaries to the extent of each person's respective one-third interest in the trust. How much income is taxed? (Hint: Apply the separate share rule.)
In the current year, the trust has DNI of $120,000. Distribution and accumulation amounts were as follows.
To Willie: $40,000 from DNI and $10,000 from corpus.
To Sylvia: $25,000. The remaining $15,000 DNI is accumulated.
To Doris: $0. The $40,000 DNI is accumulated.

How much income is taxed to each taxpayer?

 

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