REG DNI please help :((

  • Creator
    Topic
  • #172332
    forever4
    Member

    2010 Estate Income

    $20,000 Taxable interest

    10000Net long-term capital gains allocable to corpus

    2010 Estate Disbursement

    $5,000 Administrative expenses attributable to taxable

    income

    28. For the 20 I0 calendar year, what was the.estate’s

    distributable net income (DNI)?

    a. $15,000

    b. $20,000

    c. $25,000

    d. $30,000

    The answer is 15k. My only question is why didnt they subtract the net long term cap gain from the interest???? I thought it should reduce the income????

    FAR 5/14 88 PASSED!
    REG 7/13 74 :((((((((....! I cant believe it!!!! I studied so hard...
    REG retake 11/29 -> 89!!!!!!!!!!!!!!!!!!!
    BEC 10/11/12 -> 84!!!!!!!!!!!!!
    AUD 10/25/12 -> 95!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

    I'm DONE! OMG 8 months of hard work.

    I SHALL PASS. BECAUSE IT'S ME, SO EVERYTHING WILL BE OK!

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  • #355292
    futuremdcpa
    Member

    Its allocated to corpus (principal). When calculating DNI you subtract capital gains allocable to interest. Its in the REG book somewhere (if your using becker).

    REG: PASS || BEC: PASS || AUD: PASS || F: SCORE PENDING..

    #355293
    forever4
    Member

    Exactly but the answer was 15k = 20k-5k and they didnt do anything with the 10k! That's why i'm confused and need help 🙁

    FAR 5/14 88 PASSED!
    REG 7/13 74 :((((((((....! I cant believe it!!!! I studied so hard...
    REG retake 11/29 -> 89!!!!!!!!!!!!!!!!!!!
    BEC 10/11/12 -> 84!!!!!!!!!!!!!
    AUD 10/25/12 -> 95!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

    I'm DONE! OMG 8 months of hard work.

    I SHALL PASS. BECAUSE IT'S ME, SO EVERYTHING WILL BE OK!

    #355294
    futuremdcpa
    Member

    You dont have to do anything if its not in taxable income yet. When you are calculating DNI you exclude cap gains allocated to corpus.. I hope this is a better explanation.. So hence itll be the interest income of 20k minus the 5k admin expenses to bring it down to the answer of 15k. The 10k cap gains is ignored.

    REG: PASS || BEC: PASS || AUD: PASS || F: SCORE PENDING..

    #355295
    LittleMoe
    Member

    DNI ignores capital gains. Taxable income does not.

    Your DNI would be the 20k-5k=15k (ignoring the capital gains to corpus). If distributions are made over the DNI amount, the person recieving the distribution is taxed on the distribution only up to DNI.

    Taxable income would include the capital gains amount since it is taxable to the estate.

    Someone correct me if I'm wrong. I'm studying for REG currently so I may have missed something. But this is the way I understand it.

    AUD 4/12/12 79
    FAR 5/29/12 76
    REG 8/2/12 82
    BEC 8/30/12 72 Retake 10/18/12 76!!! DONE!!!!
    ExamMatrix, Wiley Books, NINJA notes and audio
    LICENSED ALABAMA CPA 11/30/12

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