Just want to see what people's thoughts are with this one, particularly for those who are savvy with trusts.
A trust makes $100 of capital gains but also makes $1000 capital loss, leaving it with a net capital loss of $900.
Trusts cannot distribute net capital loss to beneficiaries. My understanding is that the trust must use the capital loss to reduce the capital gain, which means that the net capital income will be $0.
What happens with the $100 of capital gains that is sitting in the trust bank account? Can the trust distribute the capital gains to a beneficiary, and it's just not taxed?