Lesson: Distributable Net Income

In this lesson, Nick Palazzolo, CPA, demystifies the concept of Distributable Net Income (DNI) for trusts, providing a clear explanation of how it affects the distribution of income to beneficiaries and the trust's tax liability. Nick breaks down the differences between simple and complex trusts, illustrating how DNI is calculated and the implications for distributions and penalty taxes. With practical examples, such as how a trust with a certain amount of income and deductions determines its DNI, Nick makes the complex subject of trust taxation more approachable. He also delves into the particulars of how beneficiaries report their share of the taxable income on individual returns, rounding off the session with motivational encouragement to keep up the good work and continue mastering the material.