BarbriSFCourseDetails
  • videocam Live Online with Live Q&A
  • calendar_month January 29, 2026 @ 1:00 p.m. ET./10:00 a.m. PT
  • signal_cellular_alt Intermediate
  • card_travel Tax Preparer
  • schedule 110 minutes

Allocating Capital Gains to Distributable Net Income in Estates and Trusts: Achieving Optimal Tax Treatment

$197.00

This course is $0 with these passes:

CPE
ALL
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About the Course

Introduction

This course will provide tax advisers and counsel with a drill-down into the rules and practices covering the inclusion of capital gains in distributable net income (DNI) for trusts and estates. The panel will review the requirements within trust documents to allow treating capital gains as DNI and explore state and local requirements for inclusion of capital gains in fiduciary accounting income (FAI) where the trust's governing document does not contain such a provision.

Description

The treatment of capital gains held within a trust or estate is one of the more complex aspects of fiduciary accounting and taxation. The general rule is that an estate or trust must file a tax return and pay income tax on any undistributed net income.

Where the executor of the estate or administrator of the trust has the discretion, the general practice is to distribute income whenever possible. However, trust accounting rules and IRC 643 generally treat capital gains as part of the corpus of the trust.

The current tax treatment of trusts provides a significant incentive for getting capital gains out of a trust. Currently, trusts are taxed at the maximum rate on any capital gains above the statutory threshold ($15,900 in 2025).

Additionally, these amounts are subject to the 3.8 percent NIIT, which results in a trust's capital gains being potentially taxed at a much higher rate than an individual would pay. Taxpayers can usually achieve lower taxes by including capital gains in DNI rather than the corpus amount.

Getting the most beneficial treatment of capital gains income involves careful planning by estate attorneys, financial planners, and tax accountants. By including capital gains in DNI, taxpayers may realize overall lower taxes. Tax advisers must pay close attention to ensure the trust document and the trust return permit distribution of capital gains to beneficiaries as income.

Listen as our experienced panel delves into the complex intersection of FAI and IRS rules to provide tax advisers and preparers with best practices for making the most tax-advantaged treatment of trust capital gains.

Presented By

Jeremiah W. Doyle
Senior Vice President
Bank of New York Mellon, Corp

Mr. Doyle provides clients with integrated wealth management advice on how to hold, manage and transfer their wealth in a tax efficient manner. He is the editor and co-author of Preparing Fiduciary Income Tax Returns, a contributing author of Preparing Estate Tax Returns and Understanding and Using Trusts and a contributing author of Drafting Irrevocable Trusts in Massachusetts. He is a lecturer in law in the Graduate Tax Program at Boston University School of Law.

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Jacqueline A. Patterson, CPA, JD
Partner
Buchanan & Patterson, LLP

Ms. Patterson specializes in tax, estate and financial transactions, with an emphasis on asset protection and succession planning. She advises grantors, fiduciaries and beneficiaries in matters involving the transfer, administration, investment and management of assets and is a consultant to attorneys and CPAs in fiduciary accounting, taxation and litigation. Ms. Patterson is a nationally recognized speaker and has been a seminar discussion leader and author for many years, writing and facilitating seminars in estate planning, income taxation of trusts and estates, fiduciary accounting, tax research and planning, trusts, real estate transactions, corporate taxation and charitable trusts. She has held adjunct faculty positions in the graduate tax programs at both USC and Golden Gate University. As well as being a conference speaker for the AICPA, Ms. Patterson also served on an AICPA special task force studying fiduciary accounting and on the AICPA Estate and Gift Technical Resource Panel. 

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Credit Information

  • BARBRI is a NASBA CPE sponsor and this 110-minute webinar is accredited for 2.0 CPE credits.

  • BARBRI is an IRS-approved continuing education provider offering certified courses for Enrolled Agents (EA) and Tax Return Preparers (RTRP).

Date + Time

  • event

    Thursday, January 29, 2026

  • schedule

    1:00 p.m. ET./10:00 a.m. PT

I. FAI under IRC Section 643

II. Treas. Reg. Section 643(a)-3(b) provisions for including cap gains in DNI

A. The instrument provides for inclusion in trust accounting income

B. Allocated to corpus but treated as a distribution

C. Actually distributed

III. State unitrust rules

IV. Non-tax considerations

The panel will review these and other key issues:

  • What are the general requirements of IRC 643 on the treatment of capital gains and FAI?
  • How can the trust document be structured—and interpreted—to allow the inclusion of capital gains in DNI?
  • What states or localities allow total return investing under the UPAIA?
  • What are local and state provisions that may allow capital gains inclusion in DNI?

Learning Objectives

After completing this course, you will be able to:

  • Determine how to write a trust document to allow the inclusion of capital gains in DNI
  • Recognize the three methods for including capital gains in DNI
  • Discern the tax treatment of capital gains held within a trust or estate
  • Establish how to get the most beneficial tax treatment of capital gains
  • Identify the impact of making in-kind distributions
  • Field of Study: Taxes
  • Level of Knowledge: Intermediate
  • Advance Preparation: None
  • Teaching Method: Seminar/Lecture
  • Delivery Method: Group-Internet (via computer)
  • Attendance Monitoring Method: Attendance is monitored electronically via a participant's PIN and through a series of attendance verification prompts displayed throughout the program
  • Prerequisite:

    Three years+ business or public firm experience at mid-level within the organization, preparing complex trust and estate tax forms and planning; supervisory authority over other preparers/accountants. Specific knowledge and understanding of IRC 643(a) - (b), trust document provisions to allow treatment of capital gains as distributable net income, and 3.8% NIIT impact on trust capital gains; familiarity with fiduciary accounting income, Crummey powers and 5-and-5 trust documents

BARBRI, Inc. is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of Accountancy have final authority on the acceptance of individual courses for CPE Credits. Complaints regarding registered sponsons may be submitted to NASBA through its website: www.nasbaregistry.org.

IRS Approved Provider

BARBRI is an IRS-approved continuing education provider offering certified courses for Enrolled Agents (EA) and Tax Return Preparers (RTRP).

BARBRI CE webinars-powered by Barbri-are backed by our 100% unconditional money-back guarantee: If you are not satisfied with any of our products, simply let us know and get a full refund. Contact us at 1-800-926-7926 .