A trust must use a calendar year as its taxable year. An estate can adopt a calendar year or any fiscal year. Distributed to beneficiaries, the estate or trust gets a deduction for the distribution, and the income is taxable to beneficiaries for their taxable year in which the estate or trust tax year ends. Income has the same character for beneficiaries as it had for the estate or trust. Computation of taxable income.
Gross income is the same for estates and trusts as it is for individual taxpayers.
No gain or loss is recognized on the transfer of property to the beneficiaries of the estate to fulfill a specific bequest to be paid at one time or in not more than three installments. A gain or loss is recognized when property is transferred to fulfill a specific cash bequest. Allowable deductions for an estate or trust are the same as for individual taxpayers. Standard deductions are not permitted. There is no limit on charitable contribution deductions if paid out of income.