In the current taxable year, Trust MN had DNI of $50,000, $10,000 of which was nontaxable.During the year, Trustee T made a $15,000 cash distribution to beneficiary M and a $30,000 cash distribution to beneficiary N.(The trust instrument does not require that all trust income be distributed to beneficiaries.) Based on these facts,

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The taxable portion of the distributions is based on the proportion of the DNI that is taxable. With $40,000 of the DNI being taxable ($50,000 total DNI minus $10,000 nontaxable), and total distributions of $45,000, each beneficiary reports income based on their share of the taxable DNI. M's share is $12,000 (15,000/45,000 of the taxable DNI), and N's share is $24,000 (30,000/45,000 of the taxable DNI).

In the Current Taxable Year, Trust MN Had DNI of $50,000