§652 Inclusion of Amounts in Gross Income of Beneficiaries of Trusts Distributing Current Income Only

Summary

If you are the beneficiary of a trust that must pay out all its income each year, you include the income the trust is required to distribute to you in your gross income, even if you have not actually received it yet. If the required distributions add up to more than the trust's distributable net income, your taxable share is limited to your proportional part of that net income. The income keeps the same character for you that it had for the trust, such as interest or dividends, divided proportionally among income types unless the trust document assigns specific types to specific beneficiaries. If your tax year differs from the trust's, you report based on the trust year that ends within or with your year.