Trust Y provides that all of its income must be distributed currently to A. In addition, the trustee is empowered to make discretionary distributions of principal to J and K. For each of the following situations, determine the taxable income of the trust and the amount of trust income, if any, taxable to trust beneficiaries.

a) For the taxable year, Trust Y has tentative taxable income (TTI) and distributable net income (DNI) of $100,000 comprising $70,000 of taxable interest income and $30,000 of qualifying dividends. For the year, the trust has fiduciary accounting income (FAI) of $80,000. The trustee has distributed all of the FAI to A, and $20,000 of principal to J.

b) Assume the same facts as in a., except that the trust has FAI of $90,000 and that the trustee distributes $15,000 of principal to J and $5,000 of principal to K.