Grantor transferred $1,000,000 to a trust in January 2019. Grantor had previously made more than $11,400,000 in taxable gifts. The Trustee (First Rational Bank) has the right, in its discretion, to distribute income to any of the children as the beneficiaries of the trust. There are 10 children. The trustees distribute $20,000 each of income to each of 5 beneficiaries in 2019.

1. How much of this transfer is a taxable gift?

2. How much is taxable?

3. What are the governing Code and Regulation Sections?