The Jiang Trust operates a manufacturing business. Yan created the trust several years ago by contributing a successful sole proprietorship. The trust distributed one-half of its DNI this year to Yan. Yan can retain all of the trust's depreciation deductions if:
a. Yan is in a higher income tax bracket than is the trust.
b. Jiang is in a higher income tax bracket than is Yan.
c. The depreciable assets were contributed by Yan when the trust was created.
d. One-half of the deductions belongs to the trust. No special allocations are allowed by Subchapter J.
c
RATIONALE: This is an example of substantial economic effect.
Business
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