Discretionary trust - Income distributions

[dell boy]

Excuse me if the answer to this query is obvious.

I am completing trust accounts for a disctetionary trust. There is very little income as most is tied up in investment bonds and, due to repairs on a property the trust owns, that income has been wiped out by those expenses. In fact, there is now an overdrawn income account.

There were distributions made to beneficiaries in the year which the trustees would like to be income distributions. Is this possible, or can you only distribute what income you have? Is is even possible/allowable to have a negative income account?

Thanks in advance

[Lee Young]

THE BASIC RULE IS THAT IF THERE IS NO INCOME THE TRUSTEES CAN NOT DISTRIBUTE ANY.

HAS ALLTHE INCOME FROM PREVIOUS YEARS BEEN DISTRIBUTED - EVEN IT IS HAS BEEN CAPITALISED FORM AN INVESTMENT POINT OF VIEW THERE MAYBE A TAX POOL TO VOUCH DISTRIBUTIONS IN WHICH CASE THERE IS AN ARGUMENT THAT THERE IS INCOME TO PAY OUT.