Hello,
I'm still getting a handle on how distributions are classified. If, say, a testamentary trust (Complex) says that whether 5% distribution is done in a given year is up to the beneficiary and trustee. So, does that mean that any distribution done is *all* Second Tier ("Other Amount") even though it's a mix of accounting income and principal? Or, is the accounting income input into the first tier and the remainder (if in excess) placed in second?
What really confuses me as well is, are these Tiers actuall taxed differently or is it merely a matter of the IRS wanting to know how the trust defines things?
