View all text of Subjgrp 2 [§ 1.641 - § 1.643(h)-1]
§ 1.643(d)-2 - Illustration of the provisions of section 643.
(a) The provisions of section 643 may be illustrated by the following example:
Example.(1) Under the terms of the trust instrument, the income of a trust is required to be currently distributed to W during her life. Capital gains are allocable to corpus and all expenses are charges against corpus. During the taxable year the trust has the following items of income and expenses:Dividends from domestic corporations | $30,000 | Extraordinary dividends allocated to corpus by the trustee in good faith | 20,000 | Taxable interest | 10,000 | Tax-exempt interest | 10,000 | Long-term capital gains | 10,000 | Trustee's commissions and miscellaneous expenses allocable to corpus | 5,000 |
(3) The “distributable net income” determined under section 643(a) amounts to $45,000, computed as follows:
Dividends from domestic corporations | $30,000 | Taxable interest | 10,000 | Nontaxable interest | $10,000 | Less: Expenses allocable thereto | 1,000 | 9,000 | Total | 49,000 | Less: Expenses ($5,000 less $1,000 allocable to tax-exempt interest) | 4,000 | Distributable net income | 45,000 |
(b) See paragraph (c) of the example in § 1.661(c)-2 for the computation of distributable net income where there is a charitable contributions deduction.