A trust has net accounting income and distributable net income (DNI) of $60,000, all from taxable sources. The trustee is required to distribute $40,000 of current income to Harry. In addition, the trustee makes a discretionary distribution to Harry of $10,000 and a discretionary distribution to Susan of $30,000. $20,000 of the $40,000 total discretionary distributions is from corpus. Gross income reportable by Harry is

Question

Quizplus · Accepted Answer

The $40,000 distribution required to be made to Harry is all taxable income, so $40,000 is reportable.
Of the $10,000 discretionary distribution to Harry, all of it is from taxable income, so $10,000 is reportable.
Of the $30,000 discretionary distribution to Susan, none of it is reportable by Harry.
Therefore, Harry has gross income of $40,000 + $10,000 = $50,000.

A Trust Has Net Accounting Income and Distributable Net Income