DNI / TAI Calculator
Compute Distributable Net Income (DNI), Trust Accounting Income (TAI), and the Income Distribution Deduction (IDD) for a complex trust. From Chapter 19 of the Trust Administration Guide.
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How to use this
The Income Distribution Deduction (IDD) shifts trust taxable income to beneficiaries' K-1s, where it is taxed at the beneficiary's typically lower personal brackets. The IDD equals the lesser of: (a) the amount of TAI actually distributed; or (b) the trust's DNI.
Capital gains are typically allocated to principal (not in DNI) unless the trust instrument or the state's power-to-adjust statute reallocates. If gains are in DNI, they pass through to beneficiary K-1s and the trust's taxable income falls correspondingly.
Run this calculator for the prior year in late January to evaluate a 65-day rule distribution (made by March 5 of year+1) that shifts additional DNI to beneficiaries for the just-completed tax year. See the companion 65-Day Election Worksheet tool.
Source: Trust Administration Guide Chapter 19, "Fiduciary Income Tax in Operating Depth."