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

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Harry's gross income includes the required distribution of $40,000 and half of the discretionary distribution from income ($10,000 out of $20,000), totaling $45,000.

A Trust Has Net Accounting Income and Distributable Net Income