The Williams Trust Was Established Six Years Ago $\quad$ $\quad$

The Williams Trust was established six years ago. The trust document allows the trustee to distribute income in its discretion to beneficiaries Carol and Karen for the next 15 years. The trust will then be terminated and the trust assets will be divided equally between Carol and Karen. Capital gains are part of principal.
The current year income and expenses of the trust are reported below.
$\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$$\text { Amounts Allocable to}$
$\begin{array}{lcc} & \text { Income } & \text { Principal } \\\text { Dividends } & \$ 15,000 & \\\text { Rental income from land } & 2,500 & \\\text { Tax-exempt interest } & 7,500 & \\\text { Rental expenses } & 500 & \\\text { Trustee fees } & & \$ 600 \\\text { Taxreturn preparation fee } & 250 & \\\text { Capital gain on stock sale (stock purchased five years ago) } & & 6,000 \\\end{array}$
Distribution of net accounting income to:
$\begin{array}{lc}\text { Carol } & 7,000 \\\text { Karen } & 3,500 \\\text { Payment of estimated tax } & 2,620&1,680\end{array}$
Compute (a) distributable net income (DNI), (b) distribution deduction, (c) trust taxable income, and (d) Carol's and Karen's reportable income and its classification. Charge all of the deductible expenses against the rental income.