When DNI includes exempt interest income, the beneficiary includes less than the full amount of DNI in current- year gross income.

Question

Quizplus · Accepted Answer

When a trust's Distributable Net Income (DNI) includes exempt interest income, the beneficiary's share of DNI that must be included in their current-year gross income is reduced by the portion of the DNI that is exempt from tax, resulting in the beneficiary including less than the full amount of DNI in their gross income.

When DNI Includes Exempt Interest Income, the Beneficiary Includes Less