1041-US: Difference between accounting income and distributable net income (FAQ)

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Question

What causes a difference between accounting income (AI) and distributable net income (DNI)?

Answer

The following items cause the majority of the differences between accounting income (AI) and distributable net income (DNI).

Item Accounting income Distributable net income
Income and deductions allocated to corpus Income and deductions are excluded from accounting Income and deductions are included
Passive loss Entire loss is included Loss determined on Form 8582 is included
Miscellaneous deductions Entire deduction is included Deduction less two percent of adjusted gross income is included
Screen 1099R Gross distribution is included Taxable income is included
Pass-through activities

Actual cash or property distributions received is included (entered on Screen K1-3)

Note: To include the income or losses reported on the schedule K-1 in accounting income instead of distributions received, enter X in the Include income reported instead of distributions in accounting income field in Screen Dist in the Allocation folder.

Income and deductions reported on Schedule K-1 are included

Related topic: 1041-US: Accounting and corpus income FAQs

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