Under the terms of the trust, which reports on the calendar year basis, charitable contribution a year is required to be paid out of income to designated charity. The balance of the income may, in the trustee's discretion, be accumulated or distributed to beneficiary A. Expenses are allocated against income and the trust instrument requires a reserve for depreciation. During the taxable year 1955 the trustee contributes (see below) to charity and in his discretion distributies (see below) of income to A. The trust has the following items of income and expense for the taxable year 1955:

Dividends			$ 15,000
Partially tax-exempt interest			$ 12,000
Fully tax-exempt interest			$ 10,000
Rents			$ 25,000
Rental Expenses			$ 3,000
Depreciation of rental property			$ 5,000
Trustee's commissions			$ 7,000
Charitable Contributions			$ 10,000
Discretionary Distribution			$ 20,000

Calculate the fiduciary accounting income?
	Dividends
	Partially tax-exempt interest
	Fully tax-exempt interest
	Rents
	Total				$ -	(a)
	Less: Expenses
	Rental Expenses
	Depreciation
	Trustee's Commissions
	Total				$ -	(b)
	FAI Net Income IRC Section 643(b) = (a)-(b)				$ -

Calculate the distributable net income of the trust as computed under section 643(a)
	Rents
	Dividends
	Partially tax-exempt interest
	Fully-tax-exempt interest
	Total
	Less:
	Allocable Expenses
	(TE Inc/Total Income) x Alloc Trustee Fees =
	(TE Inc/Total Income) x Charitable Contributions =
	Charitable alloc to T/E income & to Other income
	Net
	Deductions
	Rental Expenses
	Depreciation of rental property
	Trustee's commission less $ alloc to T/E interest
	Charitable Contributions less $ alloc to T/E interest
	DNI section 643(a)

Determine the character of the amounts distributed under IRC section 661(a)?
				Rental Income	Taxable Dividends	Partially Tax-exempt interest	Tax Exempt Interest	Total
	Trust Income							$ -
	Less:
	Charitable contributions							$ -
	Rental Expenses							$ -
	Depreciation							$ -
	Trustee commissions							$ -
	Allocated DNI			$ -	$ -	$ -	$ -	$ -
	Allocation of Amount
	Distributed to Beneficiary
	$ 20,000

Determine Taxable Income of the trust
	Rental Income
	Dividends
	Partially Tax-Exempt
	Gross Income			$ -
	Deductions
	Rental Expenses
	Depreciation
	Trustee Commission
	Charitable contribution
	Less: Taxable Dist to Beneficiary			$ -
	Less: Exemption $100			$ (100)
	Taxable Income to Trust			$ (100)