Tag Archives: fiduciary income

Taxation of Grantor Trusts

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Distributable Net Income and Income in Respect of a Decedent

In general, any distribution of income or principal by an estate will cause the beneficiary to be taxed to the extent of the lesser of (i) the estate’s “distributable net income” (DNI) or (ii) the amount of the distribution. Estate income is said to be “carried out” to the beneficiary. Capital gains are an exception. Since they are allocated to corpus and are not distributed to beneficiaries currently, they are generally excluded from DNI. Continue reading

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