The Trustee of the Epsilon Trust Distributed an Asset to Telly

Multiple Choice

The trustee of the Epsilon Trust distributed an asset to Telly, a qualifying income beneficiary. The asset's basis to the trust was $10,000, and its fair market value on the distribution date was $25,000. Which of the following statements is true?

A) Assuming that the trustee made an election under § 643(e) , the trust is allowed a $10,000 distribution deduction for this transaction.
B) Assuming that the trustee made an election under § 643(e) , Telly recognizes $10,000 gross income on the distribution.
C) Lacking any election by the trustee, the trust recognizes $15,000 gross income on the distribution.
D) Lacking any election by the trustee, Telly's basis in the asset is $10,000.
E) Lacking any election by the trustee, Telly's basis in the asset is stepped up to $25,000.