Trust Income, DNI, and the Income Distribution Deduction

Free CPA TCP (Tax Compliance & Planning) lesson in Entity Tax Compliance. 17 min read, ~2,540 words.

Trust accounting income (TAI) is set by the governing instrument and state law under fiduciary accounting, not tax law, and controls required distributions. Distributable net income (DNI) caps both the income distribution deduction and the amount taxable to beneficiaries. DNI equals taxable income before the distribution deduction, plus net tax-exempt...

What this lesson covers

• Content
• Example 1
• Example 2
• Common Mistakes
• Check Your Understanding
• Exam Shortcuts

Learning objectives

• II.D2

Browse all free CPA TCP lessons or jump into free CPA TCP practice questions.