The Joint Committee on Taxation, in the now infamous footnote 102, indicates that key deductions available for charitable and distributable net income (DNI) distributions may be reduced by 2/37.

This webinar will examine the 2/37 limitation and its practical significance in trust and estate administration, fiduciary income taxation, and beneficiary reporting. The program will focus on how the limitation affects the relationship between fiduciary accounting income, DNI, trust accounting allocations, and the income distribution deduction.

We’ll review the technical framework behind the rule, including how principal and income concepts interact with federal income tax reporting. The webinar will also address planning and drafting considerations under the Uniform Principal and Income Act, including the role of equitable adjustments, trustee discretion, and the risks of attempting to shift tax results through accounting allocations.

The course is designed for all estate planning professionals (including tax practitioners, fiduciaries, and trust administrators) who need to identify when the limitation matters, how it affects trust and estate tax compliance, and how to explain the issue to clients in practical terms.

Learning Objectives

• Identify the basic operation of the 2/37 limitation and when it may affect trust or estate income tax reporting.
• Explain the relationship between fiduciary accounting income, DNI, and the income distribution deduction.
• Evaluate how principal and income allocations may affect beneficiary taxation and fiduciary reporting.
• Recognize the limits of using trust accounting provisions, trustee discretion, or equitable adjustments to influence federal income tax outcomes.
• Apply practical drafting and administration considerations when advising trustees, beneficiaries, and estate planning clients.