I understand that the DNI computation can be on a cash basis -- regardless of whether the trust itself is on cash or accrual basis.
If the trust does not has sufficient cash to pay all expenses, and the institutional Trustee agrees to pay the expenses directly to the vendor by year-end -- on behalf of the trust -- and the trust record a payable to the trustee, does that make it a cash expense for the trust for the purpose of DNI computation? [The trust is expected to repay the trustee in about 30-40 days, if it matters.]
With respect to expenses allocable to DNI: The financial account of the trust that holds marketable securities incurrs a "custody" charge, payable semi-annually. Is that expense allocable to income (and deductible in DNI calc)? Or capital (not deductible in DNI calc)?
Does tax compliance cost need to be allocated between income & capital? How about legal fees related to change of situs?
TIA and Happy Holidays.