First, it's iimportant to define some terms: "Accounting Income" is nothing speccific to trusts..Acounting income is a term that is seen most in managerment accounting, as it's best used to quantify organizational performance; Accounting income or loss recognizes realized gains and losses, and does not recognize unrealized gains and losses. Economic income or loss recognizes all gains and losses, whether realized or unrealized..So TRUST account income is referring to calculating REALIZED gains and losses
from a trust. That's all..First, just to be sure we're on the same page about simple vs. complex trusts. ..., .A simple trust is one that is required to DISTRIBUTE ALL OF ITS INCOME and no amount is paid or set aside for CHARITABLE CONTRIBUTONS. Otherwise, the trust is a complex trust. And here's where state law
comes to play .. Capital Gains under most state laws and trust documents, are allocated to corpus..So although you're goin down one of the right roads in looking to state trust law, the WIDE discretion given to the trustee to maximize for beneficiaries, as part of his/her fiduciary duties WITHIN the TERMS of THE TRUST (the MOST important element/constraint regarding how decisions about distributions
are made) will be the bigggest driver of what you see on the K-1..Trustees, for example, (although not applicable here, as NJ has not adopet either RUPIA '62 OR '97) because of statutory principal or income provisions by prescribing specific accounting and income allocation methods in a state, means a trustee can follow prior law even in states that have adopted UPIA-97. .I only make this point to point out that it's the interplay between (1) State law (2) specific discretion given to trustee (3) discretion arising out of the duty to maximize for beneficiaries when not SPECICIFICALLY prohibited, and (4) the BASIC starting point that in a complex trust capital gain is allocated to corpus and not distributed (although again, in certain circumstances CAN be) ... that determins the answer you're looking for..Without providing the trust document, applying statute law, and asking the trustee what he/she was doing, your question can't be answered. You're asking for a definitive answe that can't be provided without MUCH more information.