The Code and Regulations control this scenario, Section 1.643(a)(3) in particular:
See https://www.law.cornell.edu/cfr/text/26/1.643(a)-3
Thus, the gains could be included in DNI and distributed provided such distribution is provided for in the governing instrument and allowed by applicable local law or pursuant to a reasonable and impartial exercise of discretion by the fiduciary (where that power has been granted to the fiduciary by applicable local law or by the governing instrument if not prohibited by applicable local law).
The tax professionals may disagree as to the phrase, "reasonable and impartial exercise of discretion"; one interpreting that to mean the fiduciary has the ultimate authority (i.e., discretion) whereas the other interprets that to mean the fiduciary still needs some sort of express authority.
