The Kilp Sisters Trust is required to distribute $60,000 annually equally to its two income beneficiaries, Clare and Renee. If trust income is not sufficient to pay these amounts, the trustee can invade corpus to the extent necessary.

During the current year, the trust generates only taxable interest income and records DNI of $160,000; the trustee distributes $30,000 to Clare and $150,000 to Renee.

a. Are these distributions first-tier or second-tier distributions? The distributions which are composed of trust accounting income that is required to be distributed currently come are first-tier distributions. In this case, that amount would be 60,000, paid one-half each to Renee and Clare. In addition, Renee receives _______________ in tax-free payments in excess of DNI.