you'll need to read the legal documents associated with the trust/estate. they may specify the income must be distributed to beneficiaries. Whether that includes capital gains would also be specified in the documents. Your state probably has an income and principal act that defines how expenses are to be allocated. this can affect the computation of accounting income and distributable net income which will affect the income beneficiaries are to report.
for example. for income tax purposes the income/loss of a partnership would be reported. however, for accounting income purposes under many state laws, only the cash received is included.
