The first distribution is that required and by IRC and it sounds the Trust documents that would be distributable net income (which is generally net ordinary taxable income less allowable expenses taken by the Trust, plus any tax-exempt Income such as interest of a municipality); second would be corpus or principal to the extent allowed by state law in California and if Trust documents so provide. Note that it is very atypical and most states do not allow distribution of capital gain or loss except in the terminal, final, year.
The Trust files both a Form 1041 and California Form 541. The Schedules K-1 to the Oregonians establish their obligation to include in their Forms 1040 and Form OR-40.
If this posted response is useful to you, please click on the upraised hand in the lower left of this post. Thank you. Scruffy Curmudgeon--PFFM/ IAFF, retired FireFighter/Paramedic - Locals 718/30, Veteran USAR O3 AIS/ASA '65-'67
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USAR 64-67 AIS/ASA MOS 9301 - O3
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