A trust is required to distribute all of its income currently. Two years ago, it had a $10,000 capital loss. Last year, it had a $3,000 capital gain. This year, the trust is terminated. Albert has a 40% interest in the trust, and Barbara has a 60% interest. Barbara receives a capital loss pass-through of

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Barbara receives a capital loss pass-through of $4,200 because the trust's capital loss carryover of $7,000 ($10,000 loss - $3,000 gain) is distributed according to her 60% interest in the trust.

A Trust Is Required to Distribute All of Its Income