Ernest Jacobson created an irrevocable trust in February of lastyearand designated his friend Eileen Frazier as trustee. Eileen is empowered, for life, to distribute suchincomeas she deems appropriate to herself eachyear. Anyincomenot distributed to her in a givenyearmust be retained and distributed to the remainderman Elliott Jacobson after Eileen's death. Lastyear, the trust received $22,000 ofincome, all from dividends, and Eileen distributed $4,000 of theincometo herself. It is early in the secondyear, and the supervisor has requested to make a short memo addressing what portion, if any, of theincomeistaxed to the trust.

source: IRC Sec. 678.