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Thank you. Regardless of the software I'm using, I'm seeking to understand the overall concept. I am to pay out only the taxable income to the beneficiary, not all income. Are you saying that a trust's taxable income cannot be reduced by its capital loss carryover each year (up to $3,000) before being passed to the beneficiary? I wouldn't think the beneficiary would have to pay tax on more money than the trust would have. If this is the case, how is the benefit of the capital losses ever realized?