This year,the Nano Trust reported $50,000 entity accounting income and $40,000 distributable net income (DNI).Nano distributed $60,000 cash to Horatio,its sole income beneficiary.Nano is a simple trust.Nano's distribution deduction is:

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A simple trust's distribution deduction is limited to the lesser of the trust's distributable net income (DNI) or the actual distribution made. In this case, the DNI is $40,000, which is less than the $60,000 distributed, so the deduction is $40,000.

This Year,the Nano Trust Reported $50,000 Entity Accounting Income and $40,000