Consider the term fiduciary accounting income as it is used with respect to the Federal income taxation of trusts and estates. How is this amount computed? Where is it used in computing the parties’ taxable incomes?
What will be an ideal response?
?Entity accounting income is computed using state fiduciary laws and GAAP to comply with the specifications of the will or trust agreement. Accounting income is the first computation needed in deriving DNI and the entity's taxable income.The Uniform Principal and Income Act (last major revision in 1997) provides common rules for the states to adopt in characterizing entity accounting income. Generally, operating and investment income is allocated to income beneficiaries, capital gain/loss and cost recovery are allocated to corpus, and fiduciary fees are split equally between the two.?
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