Home / CPA Course / TCP

Trusts

TCP Chapter 10 · Area II · Blueprint II.D

Trusts hold family wealth for decades, and their income is taxed either to the trust or to the beneficiaries who receive it. The Blueprint asks you to explain the roles of grantor, trustee and beneficiaries, the types of trusts (simple, complex, grantor and revocable), to split receipts between income and corpus, and to calculate a trust's accounting income, distributable net income, distribution deduction and taxable income. Tessa and Leo work with Harold Whitfield, whom you met in chapter 3, and the trusts he created for his family. Figures are for 2026: a trust reaches the 37% bracket at only $16,000 of taxable income.

In this chapter

1. What a trust is and who does what
2. Simple, complex, grantor and revocable trusts
3. Accounting income: income or corpus?
4. Distributable net income
5. The distribution deduction and trust taxable income
6. Beneficiaries, tiers and the 65-day rule

This chapter has 6 lessons, 50 practice MCQs with explanations and 20 simulations, plus flashcards and a recall sheet.

What this chapter covers

• Simple, complex, grantor and revocable trusts
• grantor, trustee, beneficiaries and corpus
• income versus corpus
• accounting income, DNI, the distribution deduction and taxable income

Chapter 9: Partnerships: partner basis, allocations and elections · Chapter 11: Tax-exempt organizations